PNJ management sees ‘light at the end of the tunnel’ after Covid

PNJ was badly affected during the Covid-19 pandemic as demand for jewelry slumped amid all-round financial hardship.

It had to close over 280 stores in the third quarter of last year when the pandemic peaked, causing losses of VND158 billion ($6.88 million) as revenues shrank by 78 percent year-on-year to their lowest levels since its IPO in 2009.

But PNJ rebounded strongly once the pandemic was brought under control. It reported profits of VND452 billion ($19.7 million), or 44 percent of its full-year target, in the final quarter of 2021.

Its revenues for the year rose by 11.6 percent to VND19.5 trillion and profits only dipped by 3.7 percent to VND1.03 trillion.

Its management described it as the “light at the end of the tunnel”, and targets record results this year.

PNJ eyes a 32-percent increase in revenues to VND25.83 trillion this year, and a 28-percent rise in profits to VND1.32 trillion, both new records if achieved.

Analysts at brokerage companies are even more upbeat.

KB Securities Vietnam has forecast profits to rise to VND1.44 trillion in 2022, SSI Securities expects a figure of VND1.42 trillion and BIDV Securities said a “short-term revenge shopping spree” would take profits to VND1.38 trillion.

Saying PNJ’s business plan is “very plausible”, PNJ chairwoman Cao Thi Ngoc Dung said demand for jewelry is “like a spring” that has been compressed due to the pandemic and is now poised to bounce back strongly.

In the first quarter of this year revenues rose by 41 percent year-on-year, she said.

She said demand for jewelry would rise in the next 10 years, explaining that customers previously preferred gold bullion, but now, with incomes increasing, they have shifted towards designer jewelry.

VnDirect Securities has forecast a compounded annual growth rate of 6.1 percent for the jewelry market in 2021-26, saying the branded retail segment could grow at two or three times that rate.

BaoViet Securities said other factors that are set to boost PNJ’s growth include its introduction of monthly payment plans and expansion of customer base toward a younger demographic, adding it has been rapidly gaining market share and now has around 56.5 percent of the mid-priced and high-end segments.

Dung said “Our position once out of the ‘Covid hole’ will be much higher than when we fell into it.”