- We maintain our target price (TP) for PNJ at VND92,200/share and upgrade our rating to BUY from OUTPERFORM. We believe PNJ’s current valuation (i.e., 2024F/25F P/E at 13x/11x) has become more attractive considering its 2023F-26F EPS CAGR of 13%.

- In this Update, we roll over our TP horizon to end-2024, whose positive impact is offset by trimming our forecasted aggregate 2024-26 NPAT by 6% because we increase aggregate SG&A expenses by 9% in 2024-26. This increase is due to our raised store count forecast for PNJ during 2024-25 following its impressive expansion pace of 28 new gold stores in 9M 2023. We expect it to maintain this pace in order to secure good locations as the retail market slowly recovers. However, we believe that sales per store require more time to ramp up.

- In the medium to long run, we anticipate that 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 Vietnam’s jewelry market in 2022 (vs 82% in 2017) according to Euromonitor. As such, we forecast a retail revenue CAGR of 18% in 2023-26F, which corresponds to our 2023F-26F EPS CAGR forecast of 13%. 

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