PNJ - H1 2021 results in line; COVID-19 poses near-term risk - Earnings Flash
  • 2021-07-21T00:00:00
  • Company Research

- PNJ released its preliminary Q2 2021 results with net revenue of VND4.5tn (USD194mn; +62% YoY) and NPAT of VND221bn (USD10mn; +598% YoY). We note that Q2 2021’s elevated YoY growth was partly attributed to a low comparative base as Vietnam imposed nationwide social distancing measures in April 2020 when — at its peak — PNJ had to close ~85% of its stores.

- For H1 2021, net revenue reached VND11.6tn (USD506mn; +50% YoY) while NPAT amounted to VND734bn (USD32mn; +67% YoY), which completed 54% and 52% of our respective full-year forecasts.

- The above results imply revenue of VND1tn (USD44mn; -17% YoY) and NPAT of VND49bn (USD2.1mn; -36% YoY) in June 2021, when HCMC — which typically accounts for about half of PNJ’s retail sales — stepped up its social distancing measures. Given the current disruptions to PNJ’s store operations, we see potential downside risk to our current forecasts, pending a fuller review. Based on information on PNJ’s website, all of the company’s stores in HCMC are currently closed.

- Retail revenue (57% of total sales in H1 2021) surged 47% YoY in H1 2021 despite a 15% YoY drop in June 2021, which underscores robust underlying demand for fashion jewelry until the recent disruptions. Online sales rocketed 317% YoY and contributed nearly 3% to PNJ’s retail sales in H1 2021. Thanks to its much higher margins vs other businesses, we estimate the retail business contributed more than 90% to total gross profits in H1 2021.

- Wholesale revenue (14% of total sales in H1 2021) increased 29% YoY in H1 2021 from a low base while gold bar revenue (27% of total sales in H1 2021) soared 73% YoY.

- In H1 2021, PNJ opened 12 gold stores while closing 14 silver stores and one CAO Fine store (luxury jewelry format). At the end of June 2021, PNJ had 311 gold stores, 19 standalone silver stores, 69 shop-in-shop watch stores, one standalone Style by PNJ store (in addition to three shop-in-shop stores located within the PNJ NEXT flagship format), three CAO Fine stores and three PNJ Art stores (showrooms for corporate gifts).