PNJ Update - OUTPERFORM - Acbs
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PNJ Update – OUTPERFORM

06/11/2023 - 10:55:52 SA
PNJ by ACBS_Update_03.11.2023 (VN).pdf
PNJ by ACBS_Update_11.03.2023.pdf

PHU NHUAN JEWELRY JSC (PNJ VN)

The company reported shaky y/y growth in 9M2023 in light of weak consumer spending, completing 69% of the company’s EAT target and 74% of our projections. The decline is expected to narrow in the last months of the year thanks to the year-end shopping and festival season. We projected the company may return to growth in 2024 based on expectations about improvement in consumer spending. Rating OUTPERFORM and moving target price to 2024 at VND86,049/share.

PNJ announced 9M2023 revenue at VND23,377bn (-8.6% y/y) and EAT at VND1,340bn (-0.1% y/y), completing 74% of our full-year projections.

The retail segment, the company’s key earner (bringing nearly 60% of the company’s revenue), experienced 10.5% y/y drop in revenue in 9M2023. The company estimated that this decline was lower than the average of the overall market. By the end of September 2023, PNJ had 390 stores (YE2022: 364) in operation, including 378 gold stores (YE2022: 343). The wholesale segment plunged by 32.1% y/y while 24K gold sales increased by 5.9% y/y. 

The company’s gross margin enhanced to 18.4% in 9M2023, compared to 17.4% in the same period last year, while the SG&A expenses to gross profit ratio climbed slightly to 59.9% compared with 59.3% in 9M2022. 

Inventories contracted by 7.6% and 4% compared to the end of 2022 and 1H2023, respectively, to VND9,709bn. The net debt to equity ratio improved from 17% at YE2022 to only 1% at the end of September 2023.  

Looking to 2024, our projections for PNJ’s net revenue and EAT are VND34,745bn (+9.9% y/y) and VND2,111bn (+15.2% y/y), 5% lower than our previous projections. Our target price for PNJ by the end of 2024 is VND86,049/share, equivalent to a total return of 19.3%.

View details in the attachment below.

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