- We cut our target price (TP) for PNJ by 2% to VND115,800/share but reiterate our BUY rating.

- Our lower TP is driven by our 2% lower aggregate 2024-2029F NPAT-MI forecast (respective changes of -5%/0%/0% for 2024/25/26F). We lower our 2024F retail GPM assumption by 2.2 ppts due to (1) higher-than-expected low-margin 24K gold jewelry sales in the retail business in H1 2024 and (2) the impact of potential procurement challenges for gold raw materials outweighing the effect of anticipated higher contribution from fashion jewelry in H2 2024.

- We believe PNJ is well-positioned to spearhead the branded jewelry industry’s growth along with the recovery of Vietnam’s middle-income and affluent class consumption. In the medium to long run, we anticipate Vietnam’s growing middle-income class will increasingly favor buying jewelry from reputable brands as opposed to purchasing it from unbranded mom-and-pop stores, which still accounted for ~67% of the market in 2022, according to Euromonitor.

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