PNJ - Solid sales on special occasions YTD; management cautious on 2025 consumer spending - Analyst Meeting Note

1. 2024 performance:

- Market share: PNJ estimates that the company gained market share in the mass and high-end luxury jewelry segments in 2024.

- Regional performance: Retail sales grew YoY across all regions, with the north benefiting from the strongest consumer spending due to higher GDP growth.

2. YTD sales performance:

- The overall retail market witnessed sluggish consumer spending, per PNJ.

- PNJ’s retail sales:

+ Retail sales on God of Wealth Day and Valentine’s Day hit record highs this year, surpassing respective previous peaks in 2022 and 2023 by a range of 10% to more than 20%.

+ Due to challenges in sourcing raw gold material, PNJ has shifted from gold bar sales to higher-margin lower-gold-content items (e.g., gold coins), leading to no gold bar sales on God of Wealth Day.

3. 2025 guidance & outlook:

- 2025 guidance has not yet been released. On a preliminary basis, PNJ expects 2025G net revenue to drop YoY due to lower YoY gold bar sales, while aiming its focus on profitability to support earnings. This overall guidance is in line with our 2025F forecasts.

+ Blended GPM: Guided to improve YoY in 2025G driven by a higher proportion of retail sales in total sales.

+ Retail GPM: PNJ has planned several initiatives, including (1) production and design optimization, (2) more effective product launches, and (3) a continued focus on high-margin, lower-gold-content jewelry to mitigate its raw gold sourcing challenges.

+ SG&A expenses: Guided to grow in line with the company’s store expansion rate.

+ Store openings: Targeting 12 to 25 net new stores, varying among three scenarios in PNJ’s 2025 guidance.

- Consumer spending:

+ Best-case scenario: Guided for recovery of consumer spending from Q3 2025, supported by favorable stimulus policies.

+ Less positive scenarios: Recovery could be delayed to Q4 or later.

- Challenges in sourcing raw gold materials have heightened since late 2024. With the Government accelerating regulatory issuances YTD, PNJ anticipates amendments to Decree 24. If delayed, PNJ plans to increase (1) jewelry recycling, (2) jewelry buy-backs, and (3) jewelry imports to offset material shortages.

4. New men’s business line:

- Since PNJ launched “Mencode by PNJ” in mid-Q4 2024, the company has gained good traction with this target demographic.

- PNJ signed contracts with its partners and plans to announce details in Q2 2025.

5. Our view:

- PNJ’s strong retail sales on special occasions YTD (God of Wealth Day and Valentine’s Day) beat our expectations. However, we see insignificant changes to our 2025F forecast due to consumer spending remaining sluggish and the heightened challenges in sourcing raw gold materials.

- PNJ’s outperformance in retail sales growth, customer base expansion, and store expansion reinforces our expectation of solid long-term retail sales growth, especially as consumer spending recovers further.

- We currently have a BUY rating for PNJ with a target price of VND113,500/share.

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