FOREIGN TRADE UNIVERSITY

FACULTY OF BUSINESS ADMINISTRATION

==========

ASSIGNMENT
FINANCIAL ANALYSIS OF PHU NHUAN JEWELRY JSC

Course: Corporate Financial Management (KET307E(GD2-HK2-2122)59CTTT.1)

Professor: Dr. Nguyễn Thị Hoa Hồng

Student Name: Trịnh Minh Hằng

Student ID: 2013280013
Class: K59 - English 02 - Advance Program of Business Administration
 TABLE OF CONTENT

CHAP 1: OVERVIEW OF THE INDUSTRY 3

CHAP 2: FINANCIAL ANALYSIS OF PHU NHUAN JEWELRY JSC 4
I. Overview of Phu Nhuan Jewelry JSC 4
II. Analysis of financial indicator 4
III. Assessment and recommendations 5
REFERENCE 6

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 CHAP 1: OVERVIEW OF THE INDUSTRY
The recent growth of Vietnam's economy has coincided with changes in people's lives as demand
for gold and silver jewelry rises. Jewelry became popular. They can be owned by anyone who
has a need and the financial resources to do so. As a result of this customer demand, an
increasing number of companies are emerging to manufacture and supply jewelry made of gold,
silver, or gold alloys - a rare metal. People can vary the design, style, or price of this sort of
jewelry, as well as the way materials are combined to create different items, resulting in market
diversity, richness, and continual development.

Over the past 15 years, the gold market has witnessed the strong development of the "big guys"
in the industry such as Bao Tin Minh Chau, Doji Gold and Silver Group, SJC, etc. In recent
years, Vietnam's gold and silver jewelry market has made a lot of progress with winning a
number of major awards for designing and manufacturing jewelry models. In 2003, there were
more than 7,000 large and small gold trading enterprises nationwide, most of them concentrated
in Ho Chi Minh City. As of 2017, Vietnam ranked 14th in the world in terms of gold
consumption.

COVID-19 is wreaking havoc on the jewelry industry. According to the research, jewelry
consumption in Vietnam could reach 7.9 tons in 2020, down 41.45% from the same period last
year. The downturn of the Vietnamese market is equivalent to that of the entire world, although it
is rather positive when compared to some of the region's countries, such as Indonesia, Singapore,
and Thailand.

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 CHAP 2: FINANCIAL ANALYSIS OF PHU NHUAN JEWELRY JSC
I. Overview of Phu Nhuan Jewelry JSC
Phu Nhuan Jewelry Joint Stock Company, better known with abbreviation name as PNJ, is one
of the most renowned and respected jewelry retailers in Vietnam. Not only is PNJ domestically
successful, but the company is also honored in Asia by Retail Asia magazine (Singapore) as one
among top 500 retailers in Asia Pacific between 2004 and 2009. Officially established on 28
April 1988 by twenty progressive like-minded people in Phu Nhuan district, PNJ
has been since showing strong and consistent development and performance, and has
consolidated its position as the biggest player in the Vietnamese jewelry sector.

PNJ is the leading jewelry and gem retail company in Vietnam. Currently, PNJ has a wide
distribution network with 166 stores and more than 3,000 distributors across the country and
have close relationships with the Australian, American, European and Japanese markets. Besides
trading in gold bars, PNJ focuses on 5 main jewelry segments:
1. CAO: Crafting high-class jewelry aimed at customers who are businesswomen successful
individuals
2. Gems: a jewelry and fashion accessory brand targeting middle and high income
customers
3. PNJ Gold: targeting female customers over 30 years old
4. PNJ Silver: targeting customers, young girls and office workers
5. Yabling: meet the jewelry and accessory needs of teenagers at a low price

II. Analysis of financial indicator

Investment thesis: PNJ continues to achieve sustainable business results in December 2021,
with net sales and net profit increasing by 29% and 43% YoY, due to pent-up demand for jewelry
and gold bars. Overall, PNJ recorded net sales and net profit of VND 19.6 trillion (+11.9% YoY)
and VND 1 trillion (-3.7% YoY) – slightly higher than SSI's estimate of NPAT is -5% YoY and
market consensus is -8% YoY. Gross profit margin decreased -140 bps compared to 2020, due to
increased revenue contribution from the gold bar segment and lower gross margin of the
wholesale segment. In 2022, we estimate net revenue and net profit to reach VND 23.6 trillion
(+20.3% YoY) and

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1.42 trillion dong (+37.4% YoY). Strong growth comes from new store openings and increased
market share. The 1-year target price for PNJ is VND 117,300/share (13.5% upside potential)
and I reiterate my recommendation.

Sustainable December 2021 business results, with net revenue of VND2.8 trillion (+29% YoY;
31% MoM) while net profit was 192 billion dong (+43.4% YoY and +37% MoM) due to pent-up
demand after social distancing. December sales are in line with February (peak in 2021) and
above pre-Covid levels. In addition, Q1/2021 is highly comparable, suggesting an even more
impressive recovery in Q4/2021. This is as we estimate that PNJ will recover in Q4/2021.

In Q4/2021, retail sales and gold bars increased strongly by 15% and 70% YoY (thanks to rising
domestic gold prices) while wholesale sales fell -4.2% YoY. Gold bar revenue increased, causing
gross profit margin to decrease from 20.2% in Q4/2020 to 17.7% in Q4/2021.

III. Assessment and recommendations

In 2022, net sales and net profit estimated as VND23.6 trillion (+20.3% YoY) & VND1.42
trillion (+20.3% YoY) +37.4% YoY). Revenue estimated by 13% based on strong the forth
quarter of 2021 results.

We believe that the proceeds from the private placement will help open 24 new PNJ Gold stores
in grade 2 & 3 cities while closing 10 PNJ Silver stores. We revise down our gross margin
estimate from 19.2% to 18.6% (2021: 18.2%) as gold bullion sales estimate remains strong in
2022 – accounting for 24% of total revenue (2021) : 25.6%). New store openings in tier 2 & 3
cities need time to increase the sales-to-customer ratio to the current store average, so we assume
2022 gross margin may not reached the 2019 level of 19.6%. The 1-year target price for PNJ is
VND 117,300/share (+13.5 percent upside potential), based on a flat target PE of 20x. We
recommend OUTPERFORM on the stock. At the price of 103,300 VND/share, PNJ is trading at
PE 2022 of 17.6x.

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 REFERENCE
Investing.com. 2022. Phu Nhuan Jewelry JSC Stock Price Today | PNJ Live Ticker -
Investing.com. [online] Available at:
<https://www.investing.com/equities/phu-nhuan-jewelry-jsc> [Accessed 11 June 2022].

2022. [online] Available at: <https://www.barrons.com/market-data/stocks/pnj?countrycode=vn>

[Accessed 11 June 2022].

En.stockbiz.vn. 2022. PNJ: Annual Report 2021. [online] Available at:

<http://en.stockbiz.vn/News/2022/5/6/1160484/pnj-annual-report-2021.aspx> [Accessed 11 June
2022].