PHU NHUAN JEWELRY JSC BUY The Jewelry Industry`s Queen
Transcription
PHU NHUAN JEWELRY JSC BUY The Jewelry Industry`s Queen
VIETNAM | EQUITY RESEARCH Company Report 2012 INITIATION OF COVERAGE PHU NHUAN JEWELRY JSC The Jewelry Industry’s Queen BUY TARGET PRICE 48,800 26/7/2012 CURRENT PRICE 41,500 Vo Bach Ngoc Anh Thu [email protected] Ext: 8851 STOCK STATISTICS Bloomberg Ticker VN PNJ Equity Outstanding shares (m) 59.9 Market Cap (VNDbn) 2,489 52W Price range (‘000VND) 24.8-46.4 3M Average Volume 55,551 Beta 0.7 Foreign ownership (%) 46.9 MAJOR SHAREHOLDERS Cao Thi Ngoc Dung Vietnam Azalea Fund Ltd* Deutsche Bank AG Dong A Bank Securities Dong A Capital Co. 10.15% 6.90% 6.28% 1.92% 1.41% STOCK PERFORMANCE Price ('000 VND) Volume 3M 5.8 6M 4.0 12M 56.6 2,300 1,600 15,000 50 Last Price 400 40 300 30 20 10 0 200 100 0 Volume ('000 shares) Relative (%) Absolute We initiate coverage on Phu Nhuan Jewelry Joint Stock Company (PNJ), a jewelry industry outperformer, with a BUY call. We like PNJ for its large domestic market share (20%), strong branding and extensive distribution system focused on the medium- and high-end markets. A high-potential market: Between 2005 and 2011, the value of gold jewelry in Vietnam increased at a six-year CAGR of 8%, from about USD399m to USD634m. Vietnamese jewelry consumption is quite low compared to other countries like India and China but the domestic market’s growth is projected to be positive, driven by the increase in domestic consumer demand in tandem with a rise in disposable income levels. A big domestic player: A strongly-branded player with a prestigious reputation, PNJ is set to benefit from Vietnam’s jewelry market’s growth. It is a well-positioned medium- and high-end jeweller with a reputation for excellent design, authentic quality and superior craftsmanship and enjoys an extensive distribution network and better client-retailer relationships compared to its peers. Ambitious plans: The management has set up a five-year plan to maintain its top position in Vietnam’s retail jewelry market. It also plans to quadruple export revenue, projecting annual revenue and profit growth at 20% and 15% respectively. In addition, PNJ plans to expand its retail network to 300 stores by the end of 2017. Excellent growth record: PNJ’s 2009-2011 CAGR of gold jewelry sales and gross profit were 29% and 20% respectively, while CAGR for silver jewelry sales were registered at 36% and 44%. BUY. We project the company’s posting an EPS of VND3,375 (on new capital of VND799bn) and a forward PE of 9.2x in 2012. Our target price is VND48,800 per share, implying a 17% premium on the current price. Year-end Dec 31 Revenue (VNDbn) Net profit (VNDbn) % change yoy EPS (VND) Diluted EPS (VND) BV (VND) DPS (VND) Div yield ROA ROE P/E (x) P/BV (x) FY09 FY10 FY11 FY12F FY13F 10,256 204 63% 5,112 13,752 212 4% 3,534 17,964 257 21% 4,285 2,556 23,894 2,500 4% 12% 21% 2.3 2.5 2,650 17,448 2,500 7% 10% 21% 5.6 2.0 3,214 18,841 2,500 6% 10% 24% 9.4 2.1 7,255 270 5% 4,500 3,375* 19,331 2,300 6% 10% 21% 9.2 2.1 7,453 324 20% 5,396 4,047* 21,378 2,000 5% 11% 23% 7.7 1.9 Source: PNJ, SBS estimates * assuming PNJ to increase 33% its charter capital from VND599bn to VND799bn 1 | See Disclaimers at the end of the report Consumer Goods INVESTMENT THESIS A burgeoning jewelry market Like other Asian markets, Vietnamese customers prefer gold jewelry over others. The Vietnam jewelry market, valued at USD634m in 2011, and grew at CAGR of 8% in 2005-2011. Locallymanufactured gold jewelry is mainly for domestic consumption; export only takes a small percentage of the total. Gold jewelry consumption is still quite low (0.15 gram/capita/year) compared with other countries as India (0.39 gram/capita/year) and China (0.27 gram/capita/year). Going forward, growth is projected to be positive, driven by increased domestic consumer demand along with the rise in disposable income levels. Besides that, Vietnamese consumers also value gold as an important savings and investment vehicle. Long term prospects for jewelry players are attractive, due to growth in both population (87m people in 2011, CAGR of 1.4% in 1990-2011) and annual tourist arrivals (3.6m people in 2011, CAGR of 11% in 2000-2011). BUY TARGET: 48,800 VND INDUSTRY: CONSUMER GOODS Vietnam’s jewelry industry is one of the economy’s growing segments. It is in the early stages of development, marked by many small players but the market has been growing across all key segments, including gold, silver, platinum and gemstones. Bigger players have significant opportunities to capture a greater market share, thanks to their advantage of scale.. A player with a strong retail presence A strongly-branded, prestigious company, PNJ is set to benefit from growth in the jewelry market. It is a medium- and high-end jeweller with an extensive distribution network (151 stores as of 31 Dec 2011), and enjoys long-term client loyalty. Known for its excellent design, authentic quality and superior craftsmanship, it has had a developed client base of medium- and high-income customers for generations. The company plans to aggressively grow its retail presence in Vietnam by adding 30 new stores in FY12 to the existing 151 in the network. Since the end of June, it has fulfilled 36% its expansion plan by opening 11 stores which include 2 gold, 8 silver and 1 Yabling accessories outlets. Enhancing the portfolio to drive growth PNJ plans to broaden its customer base by expanding its product portfolio and introducing new machine-made, lightweight, Italian style jewelry to its range of products, which currently span the low- (Yabling), medium- (silver, gold) and high end (CAO fine brand) segments. The company’s new jewelry factory, launched in 2012, will expand production capacity from 3m to 5m units, roll out newer product ranges and reduce wastage, thereby improving margins. In 2011, PNJ shortened the production process to meet orders more quickly by industrialising production in silvery jewelry by 95% and gold jewelry by 90%. The company also recently industrialised 95% of its low-end jewelry production process, quickening supply to meet market demand. Currently, PNJ’s design team has 59 Vietnamese members; it is also working with several domestic and international designers to launch international standard jewelry to the market. An able management team PNJ’s management is experienced, enthusiastic and well-motivated, with a 24-year history behind them. The company has come a long way since its humble beginnings as a small jewelry trading store in 1988. Today, the multi-outlet company has a mix of clients from the high-, middle- and low-ends, an ever expanding retail network (growing from 87 outlets in 2007 to 151 in 2011), and a diversified product portfolio. It also holds aggressive promotional, marketing and branding events. 2 | See Disclaimers at the end of the report Excellent historic growth record coped with an ambitious 5-year plan PNJ has had robust sales growth in the last three years, with 2009-2011 CAGR of gold jewelry sales and gross profit were at 29% and 20% respectively. Meanwhile, silver jewelry sales and gross profit had CAGR of 36% and 44% correspondingly. The company’s management set up a five year-plan that kicked off this year to maintain its growth momentum, top the domestic market share, increase export revenue fourfold and increase revenue and profit by 20% and 15% annually, eventually becoming Asia’s leading jewelry processor and retailer. BUY We think this plan is feasible, as PNJ management has a clear strategy. It has contracted Milanese consulting firm Value Partner to restructure and fine-tune its development plan to become Vietnam and Asia’s top jeweller. TARGET: 48,800 VND VALUATION & RECOMMENDATION BUY call at DCF fai r-value of VND48,800 /share We used the DCF method for our evaluation on PNJ, based on its routine cash flow from the jewelry business, and valued the company at VND48,800/share. Our calculation was based on the following assumptions: an average risk-free rate (Rf) of 11.5%, a Beta of 0.72x (Bloomberg), a market premium of 10%, and an average cost of debt (Rd) of 12%. We have estimated the cost of equity (Re) to be 18.7%, and consequently the weighted average cost of capital (WACC) of PNJ to be 14.9%. The perpetual growth rate is roughly 4.5%/year after 2016. FIGURE 1: DCF VALUATION APPROACH (VND’m) 2012 FCFF WACC INDUSTRY: CONSUMER GOODS Present value of given year's FCF PV of FCF 2012-16 Terminal growth rate PV of terminal value FCFF - Debt FCFE Number of shares (year-end) DCF valuation per share (VND) (62,449) 15.07% (54,272) 1,047,595 0.05 3,193,254 4,240,849 1,312,306 2,928,543 59,999,142 48,800 2013 2014 2015 2016 340,787 308,070 559,885 651,394 257,383 202,206 319,367 322,911 Source: SBS Using this method, we arrived at a fair value of VND48,800/share for the company. At the current price of VND41,500/share, our new 12M target price suggests a 18% return and thus, we recommend a BUY on the stock. 3 | See Disclaimers at the end of the report Risks BUY Raw material prices are the biggest risks in this business. Gold accounts for 70%-80% of the company’s cost of goods sold(COGS). The company cannot simply pass on the cost of gold to jewelry customers and easily retain its margins at the same time, so the bullish gold market has become a headwind for PNJ. This is a low-margin company, with overall net profit margins of 1.5% in 2010 and 1.4% in 2011. These are caused by the innate low margins (0.17%-0.34%) of the gold bar trading and gold export businesses. Overall, PNJ’s jewelry businesses have fair gross margins: around 11% for gold jewelry, 30% for CAO fine jewelry and 62% for silver jewelry. Looking forward, PNJ will focus its core business to improve its profit margins. The liquidity of the stock is low, making it less attractive as it limits the actions of large and institutional investors. As of 15 Mar 2012, the free float is estimated at 59m shares, about 42% of which are held by foreign institutional investors and 10% by domestic ones who are likely hold on to their investments for the long term. Only 2.03% of remaining equity is available for foreign investors, to comply with government mandates. INDUSTRY: CONSUMER GOODS TARGET: 48,800 VND VIETNAM’S GOLD INVESTMENT & JEWELERY INDUSTRY The gold and gold jewelry sectors have always played an important role in Vietnam’s society and economy. Between 2005 and 2011, the value of gold in Vietnam increased at a six-year CAGR of 34%, from about USD882m to USD5,195m, mostly contributed by gold investments. In 2011, Vietnam’s gold industry grew at 59% y-o-y with consumed volume hitting 100 tonnes at USD5,195m. FIGURE 2: VIET NAM Volume (tonnes) Jewelry Investment Total Value (USD’m) Jewelry Investment Total GOLD DEMAND 2009 2010 2011 YoY (%) Portion (%) 16 58 74 14 68 82 13 87 100 -10% 28% 21% 13% 87% 100% 502 1,814 2,316 558 2,713 3,271 634 4,561 5,195 14% 68% 59% 12% 88% 100% Source: World gold council (WGC) Vietnam is a small player in the global gold and gold jewelry market. This industry is a minor foreign exchange earner. According to GSO, Vietnam’s precious gems, metal and jewelry export value was valued about USD2.7bn (-6.1% y-o-y) in 2011. Exports to the South Africa and Switzerland alone accounted for about 89% of total export of precious metals, gems and jewelry from Vietnam 4 | See Disclaimers at the end of the report FIGURE 3: EXPORT AND IMPORT PRECIOUS METAL, GEM & JEWELRY 2009-2011 3,000 82% 61% 2,000 39% 1,000 FIGURE 4: MAJOR METAL, GEM & JEWELRY EXPORT MARKETS FOR VIETNAM 100% South Africa 80% Switzerland 60% America 2% France 2% 40% 18% 20% - 0% 2009 4M/2012 Japan 1% Taiwan 1% Hong Kong 1% Autralia 0% 0% Source: GSO, SBS 20% 40% 60% Source: GSO, SBS Demand for gold bars has surged in recent years; in 2011 it rose 28% y-o-y to 87 tonnes, thanks to decreasing confidence in the VND on account of high inflation and the depreciation of its value against the greenback. Investors have tried to hedge gold investments against paper money’s loss in value. The Vietnamese gold investment market in 2011 alone was worth $4.5bn (up 68% y-o-y, and growing 25% per annum from 2008-2011). Demand has been robust, due to the Vietnamese habit of placing greater trust in gold – and using it as an investment tool - over paper money and the local banking system. FIGURE 5: VN’S GOLD INVESTMENT QUARTERLY 2009-2012 Volume (tonnes) 40 35 30 25 20 15 10 5 0 MARKET SIZE, 1,877 1,373 1,087 940 304 563 494 453 503 481 789 633 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 - Value (US$mn) BUY TARGET: 48,800 VND 2011 Import (USD m) Export (USD m) Import on export ratio (%) Gold Investment INDUSTRY: CONSUMER GOODS 2010 56% 33% Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Volume (tonnes) Value (US$m) Source: WGC, SBS Gold bars were traditionally traded by small family jewellers though the government has controlled this business since 2012. According to 3 April’s decree 24/2012/ND-CP, government now strictly controls gold bar trading and gold jewelry businesses. The State now has monopolistic rights to produce gold bars, manage exports and imports to produce them. Business licenses for gold bar trading enterprises are granted when companies satisfy the following conditions: they must own capital of over VND100bn, have paid gold trading taxes of over VND500m for two consecutive years and possess a distribution network spread over at least three provinces. By the end of 2012, all small family-owned businesses, banking and jewelery companies must have licenses to legally trade gold bars. In 1Q2012, demand for gold investments was at 20 tonnes (up 43% y-o-y, down 21% q-o-q), and demand in 1QFY12 is likely to remain in a key position with a value of USD1,087m (down 21% q-o-q and up 71% y-o-y). 5 | See Disclaimers at the end of the report BUY Vietnam Gold Jewelry Vietnam’s jewelry industry is largely unorganized. There are over 12,000 players in it, the majority being family jewellers and the others comprising of organised retail players. The domestic jewelry market has been growing across all key segments including gold, silver, platinum and gemstones, with gold being the preferred choice among clients. Between 2005 and 2011, the value of gold jewelry in Vietnam increased at a six-year CAGR of 8%, from about USD399m to USD634m. In 2011, Vietnam’s gold jewelry demand grew by 14% y-o-y to USD634m, but occupied only 13% of total gold demand. The jewelry market actually contracted in volume by 10% at 13 tonnes in 2011. The gold price’s double-digit increase helped to boost the value up 14% y-o-y, even as volume shrank 10% in the same period. Vietnam’s gold jewelry industry has grown in value at a CAGR of 8% (a 11% decrease) since 2005, lower than the growth rate of nominal GDP. We attribute the modest increase to the bull market that pushed up input costs and end-product prices, which eventually restrained growth. 6 5 183 4 3 269 245 135 114 122 131 121 116 162 138 136 91 2 1 0 Volume (tonnes) 320 280 240 200 160 120 80 40 - Value (US$mn) FIGURE 6: VN’S JEWELRY MARKET SIZE, MEASURED QUARTERLY FOR 2009-2012 Volume (tonnes) TARGET: 48,800 VND In 1Q2012, demand slipped 9% to five tonnes, as a y-o-y increase in the local price of gold (and diminishing VND value) discouraged demand among customers already battling high inflation levels. Gold jewelry demand in Vietnam in 1QFY12 is likely to turn positive, with a value of USD269m(up 9.8% y-o-y) and volume at five tonnes (down 9% y-o-y). Value (US$m) It is also apparent that jewelry isn’t as popular in Southeast Asia as it is in China or India, which account for 55% of global demand. Consumption in Vietnam is 0.15 gram/capita/year, compared with India (0.47 gram/capita/year) and China (0.38 gram/capita/year). Going forward, growth in Vietnam’s jewelery market is projected to be positive, driven by the increase in domestic consumer demand and the rise in disposable income levels. FIGURE 7: VN’S JEWELRY CONSUMPTION PER CAPITA PER YEAR, 2011 DATA 0.500 0.469 0.381 0.400 Gr/capita/year INDUSTRY: CONSUMER GOODS Source: WGC, SBS 0.300 0.200 0.148 0.064 0.100 India China India Source: WGC, SBS 6 | See Disclaimers at the end of the report China Vietnam Vietnam ThaiLand ThaiLand PNJ’S POSITION & STRENGTH Market positions Established in December 1988 as Phu Nhuan Jewelry Shop, equitised in January 2004 and listed in March 2009, PNJ is a big manufacturer of jewelry products for the domestic Vietnamese market. BUY One of the jewelry industry’s largest players, PNJ primarily focuses on the domestic market, which contributes over 97% of its total jewelry sales while the remaining 3% comes from export. In Vietnam, it owns 20% and 70% of market shares in gold and silver jewelry respectively. The company is ranked at the 16th of the top 500 largest jewelry companies in the Asia, according to the Plimsoll World Portfolio Analysis. TARGET: 48,800 VND Largest retail distribution system PNJ currently has 151 retail stores nationwide and nearly 3,000 wholesalers, concentrated in 56 provinces around the country. Between 2007 and 2011, the number of stores increased at a five-year CAGR of 20% and by December last year, the company owned 151 outlets, namely 131 PNJ stores, 15 CAO stores and 7 Jemma stores. PNJ plans to expand its retail presence by another nine gold and 21 silver stores in this year. It plans to open 30 to 40 new retail stores per year and aims to own 300 retail stores at the end of 2017. FIGURE 8: NUMBER OF STORES IN 2007-2011 160 139 FIGURE 9: STORES BY PRODUCTS BRAND, 2011 151 110 120 87 CAO 7% Jemma 4% 89 80 PNJ 89% 40 INDUSTRY: CONSUMER GOODS 0 2007 2008 2009 2010 2011 Source: PNJ, SBS Business Advantages Quality workforce. PNJ has over 1,000 craftsmen, engineers, and active teams in designing, marketing, sales and management. • • Modern technological system. It owns hi-tech global standard manufacturing systems from Germany and Italy, which are up to date. • Reputable brand name. PNJ has leading brands, namely PNJ Gold, PNJ Silver and CAO Fine jewelry that domestic and foreign clients are familiar with. Capacity Currently, PNJ produces about three million items annually. This year, the company will open a new facility and upgrade its production capacity to five million items. 7 | See Disclaimers at the end of the report PNJ’S BUSINESS TARGET: 48,800 VND BUY PNJ’s core businesses PNJ products include gold and silver jewelry, precious and semi-precious stones. The portfolio includes rings, earnings, pendants, bracelets and necklaces. Most customers recognise PNJ Gold and PNJ silver as two traditional, well-established brands. Besides that, PNJ also owns the luxury CAO Fine and low-end Yabling brands. CAO fine Jewelry and JEMMA brands belong to PNJ subsidiary CAO Fashion Company, which specialises in luxury jewelry and accessories. The Yabling brand has just been launched on the market, retailing items in smaller volumes. FIGURE 10: PNJ’S PRODUCT BRANDS PNJ Gold PNJ Silver Yabling JEMMA Source: PNJ, SBS ` Among the five brands, PNJ Gold and PNJ Silver are main contributors to sales and gross profit. The gold jewelry market took 20% of total company sales and 52% of gross profit in 2011. The silver jewelry took 1% and 18% respectively. Additionally there were premium market sales under the premium ‘CAO’ brand which took 0.4% sales and 5% gross profit respectively FIGURE 11: REVENUE BY SEGMENTS 2011 INDUSTRY: CONSUMER GOODS CAO fine Jewelry Watchs 0% Orther services Gas 0% 3% Watchs 0% Gold Jewelry 20% 24k gold export 28% Gold bar 48% Source: PNJ, SBS 8 | See Disclaimers at the end of the report FIGURE 12: GROSS PROFIT BY SEGMENTS 2011 Silver Jewelry 1% CAO FINE 0% 24k gold Gold export bar 1% 12% CAO FINE 5% Orther services 2% Gas 10% Silver Jewelry 18% Gold Jewelry 52% Gold Jewelry Segment Established in 1988, PNJ Gold targets women aged 25-45 with medium and high incomes as customers, offering products that feature precious and semi-precious gems set in 24k, 18k, 14k and 10k gold. In 2011, PNJ Gold’s contribution to total revenue shrank y-o-y) to 19.6% and contribution to total gross profit decreased slightly from 52.7% (2009) to 51.5% (2011). In 2011, the gold jewelry generated VND3,541bn in sales (up 0.6% y-o-y) to contribute to 20% of total revenue; in this, export revenue accounted for 2.7% and domestic sales 97.2% of total revenue. From 2009 to 2011, PNJ gold jewelry grew at CAGR of 28.4%. BUY In geographical terms, Vietnam’s South and South East areas are major markets, accounting for 76.99% of gold jewelry revenue in 2011, with a growth rate of 19.36% y-o-y. The fiercely competitive and unique North market accounted for only 6.67% of gold jewelry sales, the Central and Western areas 8.7% each. PNJ’s business in the Western region saw the greatest growth, with a 19.98% increase in sales. In recent years, gold prices have fluctuated in an uptrend to affect overall gross profits; in 2011, the gross profit in this segment was 10.7%, down 4.4% y-o-y. FIGURE 13: REVENUE AND GROSS PROFIT IN GOLD JEWELRY 4,000 15.0% 12.3% TARGET: 48,800 VND FIGURE 14: GOLD JEWELRY SALES BY MARKET 2011 3,000 11.2% 10.0% North 7% Central 8% Western 8% 10.7% 2,000 5.0% 1,000 0 South 77% 0.0% 2009 2010 Revenue (VND bn) 2011 GPM (%) INDUSTRY: CONSUMER GOODS Source: PNJ, SBS Silver jewelry segment The PNJ Silver brand was established from June 2001, targeting girls aged 15 to 25 years and selling fashion jewelry made from pure silver. PNJ silver jewelry contributed only 0.9% of revenue but gross profit went up by 17.5%. In 2009-2011, PNJ silver jewelry enjoyed robust growth at CAGR of 36.1%. In 2011, silver jewelry revenue showed robust growth of 36.82% y-o-y at VND164bn, with revenues from the South expanding 37% y-o-y, North by 47%, Central by 67% and the West by 54%. The South area (including Ho Chi Minh City and the South East) accounted for 62.59% in sales, followed by the North (22.8%), West (7.6%) and the Central (6.9%) areas. PNJ Silver seems to be a monopoly brand as there is less competition in the North with a y-o-y high growth rate, and gross profit of 78% in (up 9.3% y-o-y) last year. 9 | See Disclaimers at the end of the report FIGURE 15: REVENUE AND GROSS PROFIT IN SILVER JEWELRY 200 71.6% 150 78.3% 90.0% Central 7% Western 8% 60.0% 70.3% 100 30.0% 50 0 North 23% South 62% 0.0% 2009 2010 2011 BUY Revenue (VND bn) Source: PNJ, SBS TARGET: 48,800 VND CAO fine jewelry & JEMMA segments CAO Fine Jewelry and Jemma, owned by PNJ subsidiary CAO Fashion Company, are targeted towards successful businesswomen aged 30 to 45 years, selling luxury jewelry with unique and sophisticated designs. Jemma targets women with medium to high incomes, aged from 25 to 35 years and markets fashion jewelry and stylish accessories in fresh, new colours and made with various materials. These two brands contributed only 0.5% in sales and 5% in gross profit last year. In 2011, the CAO Fashion Company’s sales were split between CAO Fashion Jewelry (90.4%) and Jemma (9.6%) FIGURE 17: REVENUE AND GROSS PROFIT CAO COMPANY 100 60.0% 48.2% 80 60 FIGURE18: CAO JEWELRY SALES BY BRANDS 2011 JEMMA 10% 33.8% 40.0% 34.5% 40 20.0% 20 INDUSTRY: CONSUMER GOODS FIGURE 16: SILVER JEWELRY SALES BY MARKET 2011 0 CAO Fine 90% 0.0% 2009 2010 2011 Revenue (VND bn) Source: PNJ, SBS Gold bar trading & 24k gold exports Beside jewelry, PNJ also trades in gold bars and exports gold. The gold bar business operates on very thin margins, as prices fluctuate and there is a great difference between world and domestic prices. Gold bar trading is the biggest contributor for PNJ, generating 47.9% of total revenue (2011), though it made up only 11.6% in gross profit last year. Between 2009 and 2011, the gold bar business grew at a CAGR of 149%. In 2011, the gold bar revenue grew by 103.5% y-o-y at VND8,640bn, with the gross profit margin improved at 0.99%, up seven times from the year before. In the same period, PNJ 24k gold bar exports were at VND4,966bn (down 14% y-o-y) which was 27.5% of total revenue and 1.3% of total gross profit. Between 2009 and 2011, PNJ’s gold exports had a CAGR of 119% 10 | See Disclaimers at the end of the report FIGURE 19: REVENUE AND GROSS PROFIT GOLD BAR TRADING 10,000 1.50% 8,000 0.99% 6,000 0.13% 0.14% 0 BUY TARGET: 48,800 VND 1.35% 1.50% 6,000 0.50% 1.00% 0.32% 2,000 0.00% 2009 2010 2011 Revenue (VND bn) 0.50% 0.20% 0 0.00% 2009 2010 2011 Revenue (VND bn) Source: PNJ, SBS Non-core businesses INDUSTRY: CONSUMER GOODS 8,000 4,000 4,000 2,000 1.00% FIGURE 20: REVENUE AND GROSS PROFIT 24K GOLD EXPORT PNJ investment PNJ had a 70% stake in gas trading company Dai Viet Energy JSC, which it divested to Tolagaz Viet Nam Ltd in Dec 2011 for VND 122.5bn. PNJ received a VND52.5bn deposit for the sale on 31 Dec 2011, contributing 3.4% to 2011’s revenue and raising it by 14.5% y-o-y. It announced the liquidation of its Dai Viet shares on 29 June. PNJ also has long term investments in banking, real estate and fuel worth VND733bn, comprising 25% of its total assets and 65% of shareholders equity in FY2011, which generated VND64bn last year. Total long-term investments at the end of 2011 was valued at VND712bn, after it liquidated its share of the Kinh Do real estate company. FIGURE21: PNJ FINANCIALS LONG TERM INVESTMENT 2009 2010 Investment value (VND bn) 520.4 749.5 Joint-venture investment 129.7 261.5 Saigon fuel JSC 49.9 138.6 Dong A land JSC 72.0 91.9 Hong Vina Ltd., 7.8 10.7 Consolidated value of associated Company 20.3 Stock investment 401.3 486.0 Dong A bank 272.1 356.8 M&C Corp (real estate) 65.4 65.4 Que Huong Liberty Hotel 40.8 40.8 Kinh Do Real estate JSC 23.0 23.0 Bond investment 0.2 12.8 Dai Viet investment 1.1 Hoang Minh Giam Project 10.1 Convertible bond 1.7 Government bond 0.2 Provision (10.8) (10.8) Source: PNJ, SBS 11 | See Disclaimers at the end of the report 2011 712.4 258.3 138.6 91.9 27.8 464.7 356.8 65.4 42.5 10.6 0.5 10.1 (21.1) DongA Bank (EAB) is the company’s biggest investment, accounting for 48% of total investments. PNJ was a founding shareholder of DongA Bank, with 7.7% ownership at the end of 2011. EAB’s pre-tax profit for the same period was VND1,255bn (up 46% y-o-y), with a 16% dividend rate at par value. BUY Dong A Land. PNJ holds 30.6% capital of Dong A Land, another long-term investment. Due to real estate market difficulties, the implementation of two main projects, Golden Square in Da Nang City and Phu Thuan Residential in District 7, were affected. Dong A Land’s revenue were largely derived from construction and consultant services. Total revenue generated was VND55bn, while the company incurred a VND15bm loss, from interest expenses. Sai Gon Fuel JSC (SFC). PNJ owns 49.99% of Sai Gon Fuel JSC, as of end-2011. SFC VND1,794bn (up 28% y-o-y) in revenue and the profit before tax of VND39.1 bn (down 46.8% y-o-y) for 2011 because of high cost of goods sold in real estate and gas segments. Sai Gon M&C and Que Huong Liberty. PNJ holds 5% and 2.6% in each company respectively and plans to exit from them via a deal this year. TARGET: 48,800 VND FIGURE 22: FINANCIAL REVENUE (VND BN) 60.0 50.0 40.0 30.0 20.0 10.0 2009 2010 2011 FIGURE 23: FINANCIAL EXPENSE (VND BN) 120.0 100.0 80.0 60.0 2009 2010 2011 40.0 20.0 - INDUSTRY: CONSUMER GOODS - Source: PNJ, SBS In 2011, the company recorded dividends from its investments amounting to VND53bn, which comprised 82% of total financial income. Interest expenses are big burden for PNJ. From 2009-2011, the company’s interest expenses grew at CAGR of 58.5%. The interest expense incurred in 2011 was VND104bn (77% y-o-y). PNJ’s huge interest expense for its gold debt to produce jewelry always offset high dividend income. 12 | See Disclaimers at the end of the report PNJ FINANCIAL ANALYSIS Low profit margin business The company has increased gold bar sales and gold exports since 2009. From 2009 to 2011, revenue grew at a CAGR of 32%, gross profit at CAGR of 21.4% and net profit at CAGR of 12%. Management has tried to manage gross margins around 4% against the fluctuating price of gold. Net margins has decreased from 2% (2009) to 1.4% (2011) because of high interest expense offsetting gross profits. FIGURE 24: PROFIT MARGIN IN 2007-2011 (%) 20,000 10.0% 8.5% 8.4% 8.0% BUY 15,000 6.0% 4.9% 4.7% 10,000 3.9% 4.1% 3.0% 2.0% 5,000 1.5% 1.4% - TARGET: 48,800 VND 2.0% 0.0% 2007 2008 2009 2010 Revenue (VND bn) Gross profit margin (%) 2011 Gross profit (VND bn) Net profit margin (%) Source: PNJ, SBS Selling & administration expenses are under control PNJ owns 151 jewelry stores and has a network that expands by 15 to 20 stores each year. Increased sales along with network expansion have marked expenses growing at CAGR of 36%, while administrative costs increased at CAGR of 44% in 2007 to 2011. Selling and administration costs decreased slightly y-o-y in 2011; PNJ tries to maintain them at 1.8% and 0.6% of sales respectively FIGURE 25: SELLING & ADMINISTRATION EXPENSE ON SALES IN 07-11 (%) 4.0% INDUSTRY: CONSUMER GOODS 4.0% 3.6% 3.4% 3.0% 2.0% 0.9% 1.8% 1.8% 0.6% 0.6% 0.5% 2009 2010 2011 1.6% 1.1% 1.0% 0.0% 2007 2008 % selling expense o sales Source: PNJ, SBS 13 | See Disclaimers at the end of the report % administration expense o sales Financial Income In 2011, PNJ incurred a net loss of VND61bn, mainly due to the increment on interest expenses (from VND58bn to VND103bn, +76.9% y-o-y). Short- and long-term debts rose to VND1,339bn (+57% y-o-y) by the second quarter, indicating a huge burden on interest expenses. Abnormal incomes were lower than the year before (-30% y-o-y), as it recorded a low income from associates (approx. VND11bn) in 2011 against VND21bn in 2010 FIGURE 26: FINANCIAL GAIN (LOSS) (VND BN) BUY 40 22.2% 20 1.6% -3.8% -0.7% TARGET: 48,800 VND (20) FIGURE 27: ABNORMAL INCOME (VND BN) 30.0% 50 20.0% 40 10.0% 30 0.0% 20 (40) -10.0% (60) -20.0% (80) -19.1% -30.0% 20% 15% 16% 6% 6% 4% - 0% 2007 2007 2008 2009 2010 2011 12% 8% 10 2008 2009 2010 2011 Other income (VND bn) Income from associates (VND bn) % abnormal income in PBT Financial gain (loss) (VND bn) % financial income in PBT Source: PNJ, SBS Profitability PNJ showed a strong return on equity (ROE) at 24.2% (+12.5% y-o-y) in 2011, led by the asset turnover increases of 9.9% y-o-y and a higher proportion of debt in the firm’s capital structure (+11.6% y-o-y). Returns on asset were at 10.4% (+1.96% y-o-y), and the debt level ratio was at 60.5% of total assets. FIGURE 28: ROE & ROA IN 07-11 (%) 30.0% INDUSTRY: CONSUMER GOODS 9% 8% 25.0% 24.2% 24.0% 21.7% 21.3% 21.5% 20.0% 15.0% 12.4% 11.0% 11.6% 2008 2009 10.2% 10.4% 2010 2011 10.0% 5.0% 0.0% 2007 ROE (%) Source: PNJ, SBS 14 | See Disclaimers at the end of the report ROA (%) Capital structure More loans are needed to fund gold manufacturing and store expansion; the latter requires over VND150bn in investment. Short term debt shrank by 36.39% in 2011 as PNJ narrowed its short-term loans in gold by VND600bn while it increased its own USD and VND loans, especially long-term borrowings which increased 4.3 times from 2010. FIGURE 29: CAPITAL STRUCTURE 2009-2011 (VND BN) 2,000 1.6 BUY 1,600 800 2.0 1,200 1.6 1.3 1.1 1,200 FIGURE 30: LOAN STRUCTURE 2009-2011 (VND BN) 1.2 0.8 0.8 0.5 400 800 400 0.4 - - Short term loan Long Term loan (VND bn) (VND bn) 2007 2008 2009 2010 2011 INDUSTRY: CONSUMER GOODS TARGET: 48,800 VND Debt (D) Equity (E) D/E (%) 2007 2008 2009 2010 2011 Source: PNJ, SBS PROJECTION & OUTLOOK Mission & Goals for 2012-2017 PROJECTIONS 1H2012 results PNJ aims to be a leading company in jewelry processing and retailing in Asia, while holding pole position in Vietnam for all of its segments. It aims for its export sales to expand fourfold by the end of 2017, with revenue increasing 20% and profit by 15% each year. In 1H2012, the company added 11 new stores, totalling 162 outlets across Vietnam. Management was confident of meeting its target of adding 30 stores during the current financial year. In its unconsolidated financial results, PNJ reported 1HFY12 net revenue of VND3,318bn (down 58% y-o-y) on the back of weak gold bar demand. Gold segment sales decreased 59% at VND2,956bn while gold bar sales shrank 61% to VND1,454bn. 24k gold exports were down 100% y-o-y and gold jewelry only shrank by 1% y-o-y at VND 1,796 bn. PNJ expects gold trading revenue to fall this year, due to expected lower consumption of gold bars after the issuance of the new MOF circular on gold bar trading management. Besides that, silver jewelry sales slightly increased 0.5% (at VND85 bn) in basis y-o-y respectively. Moreover, selling expense has increased with higher employees’ wages. PNJ had a operating profit of VND152bn (down 16% y-o-y) for 2011, which translated into a PAT of VND127bn (-14% y-o-y). 15 | See Disclaimers at the end of the report FIGURE 31: P&L (VNDBN) TARGET: 48,800 VND BUY Total revenue Gold segment Gem & Jewelry Silver segment Watch Service Net revenue Expenditure as % of sales Cost of goods sold (COGS) % COGS on revenue Selling expenses % on revenue Administration expenses % on revenue EBIT Financial income/loss Other income Profit before tax Total tax Net profit 1H12 7,962 7,276 590 86 3 8 7,930 (7,748) 97.7% (7,612) 96.0% (101) 1.3% (34) 0.4% 182 (2) 5 183 (36) 148 Y-O-Y% 3,344 2,956 293 86 3 5 3,318 (3,165) 95.4% (3,023) 91.1% (109) 3.3% (33) 1.0% 152 (7) 10 156 (29) 127 -58.0% -59.4% -50.2% 0.5% 5.3% -40.7% -58.2% -59.1% -2.4% -60.3% -5.1% 7.5% 156.8% -3.4% 130.9% -16.1% 209.5% 113.3% -15.2% -19.3% -14.2% Source: PNJ, SBS Gross profit margins for 1H12 was up to 8.9% (+4.8% y-o-y), due to strong contributions from the jewelry segment. Gold jewelry sales accounted for 70% of gross profit, followed by silver at 22%, gold bar trading at 6% and others at 2%. The cost of goods sold as a percentage of net sales were down 5% y-o-y to 91.1% in 1HFY12. Gross profits margin of jewelery sales also decreased on average by 2.2% due to more spending on promotions to boost sales in 1H2012. PNJ recorded 4.6% (+2.3% y-o-y) in EBIT margin in 1H2012, while net profit margin went up to 3.8% (+1.96% y-o-y). According to the company’s targets, PNJ’s operations in 1HFY12 have fulfilled the revenue and net income target at 32% and 49% respectively FIGURE 32: MARGIN (%) INDUSTRY: CONSUMER GOODS 1H11 Gross profit margin EBIT margin EBT margin Effective tax rate Net profit margin Projections for 2012-2016 1H11 4.0% 2.3% 2.3% 19.5% 1.9% 1H12 8.9% 4.6% 4.7% 18.6% 3.8% Y-O-Y% 4.88% 2.30% 2.38% -0.94% 1.96% On 25 May 2012 the State Bank officially promulgated Circular No. 16/2012/TT-NHNN to guide some articles of Decree No. 24/2012/ND-CP on the management of gold trading activities. According to the circular, the six-month transition period for gold trading businesses starting on 10 July is a period in which banks and enterprises need to acquire new licenses in order to be legally allowed to trade in gold bars. Over the next five years, PNJ will focus on its core business while reducing its operations in gold bar trading and 24k gold exports. We expect revenue from gold and CAO fine jewelry sales to grow at CAGR of 13% and 11%, lower than the 24% and 22% respectively recorded from 2007 to 2011. Silver sales will grow to 35%, a 1% increase from the 2007 to 2011 period as well. In 29 June, PNJ also completed liquidating its stake in Dai Viet Energy (Vinagas) to Totalgaz Company at VND122.5bn, thereby earning VND52.5bn in income for the company 16 | See Disclaimers at the end of the report INDUSTRY: CONSUMER GOODS TARGET: 48,800 VND BUY Charter capital raising plan The company is scheduled to increase its charter capital from VND599.9bn to VND799.9bn (+33% y-oy) through the issuance of 19,999,728 shares, of which 60% has been set aside for bonus shares, 25% for private issue and 15% allocated for its Employee Stock Ownership Plan in FY12. The Company recently announced that the ex-right date for bonus share would be 24 August 2012. We also raised the questions of schedule and target price for the remainder of shares to be issued, though company representatives answered that the plan has not fixed yet. In this model, we assume that the issuing price for employees and strategic investors will be VND15,000 and VND34,000 per share (after being adjusted for the bonus share issuance mentioned), respectively. Hence, the total proceeds from the issuance is approximately VND200 bn. FIGURE 33: PNJ P&L PROJECTION FY12-16 (VND bn) 2009 2010 2011 2012E 2013E 2014E 2015E 2016E Total Net Sales Sales growth (%) CoGS Gross profit Gross profit margin (%) SG&A SG&A as % of sales EBITDA EBITDA margin (%) EBITDA growth rate (%) Operating profit Operating profit margin (%) Financial income & Others Pre-tax income Tax Effective tax rate (%) Net profit Net profit margin (%) Net profit growth (%) Number of shares (m, year-end) EPS (VND) EPS growth (%) 10,256 145% 9,755 501 5% 247 2% 292 3% 52% 254 2% 20 275 55 20% 204 2.0% 63% 40 5,112 13,752 34% 13,211 542 4% 322 2% 280 2% -4% 219 2% 45 264 53 20% 212 1.5% 4% 60 3,534 17,964 31% 17,226 738 4% 388 2% 334 2% 19% 351 2% (32) 318 61 19% 257 1.4% 21% 60 4,285 7,255 -60% 6,586 669 9% 356 5% 447 6% 34% 313 4% 20 333 63 19% 270 3.7% 5% 80 3,375* 7,453 3% 6,626 827 11% 365 5% 552 7% 23% 462 6% (30) 432 108 25% 324 4.3% 20% 80 4,047* 7,748 4% 6,786 962 12% 380 5% 691 9% 25% 582 8% (32) 551 138 25% 413 5.3% 28% 80 5,164* 8,165 5% 7,076 1,090 13% 408 5% 790 10% 14% 681 8% (32) 649 162 25% 487 6.0% 18% 80 6,085* 8,767 7% 7,488 1,278 15% 447 5% 942 11% 19% 831 9% (34) 797 199 25% 598 6.8% 23% 80 7,473* 22% -31% 21% -21% 20% 28% 18% 23% Source: SBS forecast * assuming PNJ to increase 33% its charter capital from VND599bn to VND799bn 17 | See Disclaimers at the end of the report COMPANY OVERVIEW Background PNJ was established in 1988 as a trading business and today, is one of the leading gold jewelry players in Vietnam with a 20% market share. The group’s initial capital was registered at VND599.9bn in Dec 2011. This year, the company will increase its charter capital from VND599.9bn to VND799.9bn (+33% y-o-y) through the issuance of 19,999,728 shares, of which 60% has been set aside for bonus shares, 25% for private issue and 15% allocated for its Employee Stock Ownership Plan in FY12 Charter capital (VND bn) BUY CHART 34: PNJ’S CHARTER CAPITAL 1000 800 600 400 200 0 800 600 40 55 100 120 240 300 TARGET: 48,800 VND Source: PNJ, SBS Shareholders Structure Up to 30 June, there were 599m outstanding shares held by domestic and foreign investors to the ratio of 1.13:1. The company’s share liquidity averages 55,551 shares per day over a period of 90 days. There is room for another 2.03% in its foreign shareholding portion About 10.1% of PNJ’s shares are owned by chairman and General Director Ms Cao Thi Ngoc Dung. Other major shareholders are the Vietnam Azaleah Fund Ltd (6.90%), Deutsche Bank (6.28%), DongA Bank Securities (1.92%) and Dong A Capital Company (1.41%) CHART 35: PNJ’S SHAREHOLDER STRUCTURE 1.9% 10.1% 1.4% CEO - Ms Dung Dong A Bank Securities Dong A Capital Company 33.8% Other domestic investors INDUSTRY: CONSUMER GOODS 6.3% 39.6% 6.9% Vietnam Azalea Fund Ltd Deutche Bank & Deutche AM Other foreign investors Source: PNJ, Bloomberg, SBS Company Structure CHART 36: SUBSIDIARIES AND ASSOCIATED COMPANIES (31/12/2011) Company Business type PNJ’s stake Charter Cap (VND bn) Subsidiary CAO fashion Company Ltd., Jewelry 100.00% 10 PNJ laboratory company Ltd., (PNJL) Appraisal Services 100.00% 10 Associated company Dong A land JSC Real estate 30.62% 100 Saigon fuel JSC (SFC) Fuel 49.99% 103 Source: PNJ, SBS 18 | See Disclaimers at the end of the report APPENDIX 1 B A L A NC E SH E E T ( V N D b n ) Assets Current assets Long-term assets Fixed assets Long-term investments Resources Liabilities Current liabilities Long-term borrowings and liabilities Equities Owner's equity Contributed capital Capital surplus Retained profits/(accumulated losses) Y E A R L Y R AT I O S 2009 2010 2011 2,025.7 2,464.2 2,928.1 982.0 1,176.6 1,605.0 1,043.6 1,287.6 1,323.1 362.8 331.6 419.6 520.4 749.5 712.4 2,025.7 2,464.2 2,928.1 987.4 1,375.1 1,771.0 869.7 1,224.7 973.4 117.7 150.4 797.6 991.4 1,060.4 1,130.5 955.7 1,046.9 1,130.5 400.0 600.0 600.0 425.0 225.0 225.0 52.3 143.7 197.1 I NC O M E S T A T E M E N T ( V N D b n ) Net sales COGS Gross profit /(loss) Financial income Financial expense Interest expense Selling expenses G&A expenses Net operating profit /(loss) Other income Other expenses Profit /(loss) before tax Corporate income tax Profit after tax Net profit/(accumulated losses) 2009 2010 2011 10,256.3 13,752.4 17,963.8 9,755.4 13,210.5 17,225.5 500.9 541.9 738.3 85.2 86.1 64.8 75.8 60.4 125.5 185.5 243.3 289.5 61.1 79.2 98.1 263.7 245.1 289.9 12.1 30.7 29.9 1.0 11.9 1.6 274.7 263.9 318.2 54.6 51.9 60.7 219.8 211.3 257.5 204.5 212.0 257.1 C A SH FL O W ST A T E M E N T ( V N D b n ) 2009 Cash flows from operating activities Profit/(loss) before tax Depreciation and amortisation Allowances and provisions Profits/(losses) from investing activities Operating profit before changes in WC CF from operating activities Cash flows from investing activities Receipt/payments for additions to assets Receipt/payments for investments entities CF from investing activities Cash flows from financing activities Proceeds from equity issued Proceeds from long-term borrowings CF from financing activities Net CF during the period Cash at the beginning Cash at the end 19 | See Disclaimers at the end of the report 2010 2011 274.7 263.9 318.2 41.0 43.9 42.3 2.5 0.1 12.1 (71.7) (83.8) (69.0) 299.7 282.8 493.3 45.5 3.1 154.2 (102.5) (112.4) (115.7) (125.6) (217.1) (70.0) (102.5) (203.3) (102.9) 3,836.4 6,600.0 8,767.1 121.6 263.1 61.2 64.7 62.8 112.6 210.5 275.0 337.8 275.0 337.8 454.1 (0.0) Growth rate Revenue growth rate Gross profit growth rate Net profit growth rate Total asset growth rate Equity growth rate Profitability ratios Gross profit margin EBIT margin Profit before tax margin Net profit margin ROA ROE Dupont Analysis Net profit margin(1) Asset turnover (2) Equity multiplier (3) ROE = (1)x(2)x(3) Management ratios Receivable outstanding days Inventory outstanding days Payable outstanding days Asset turnover Long-term asset turnover Fix asset turnover Liquidity ratios Current ratio Quick ratio Cash ratio Capital Structure Total debt/Total Equity Total debt/Total Asset Total asset/Total Equity Index per share PE PBV PS EPS (VND per share) Revenue/share (VND/share) Book value (VND/share) 2009 2010 2011 145.4% 34.1% 30.6% 43.1% 8.2% 36.3% 62.9% 3.7% 21.3% 20.4% 21.6% 18.8% 7.0% 9.5% 8.0% 4.9% 3.9% 4.1% - - - 2.7% 1.9% 1.8% 1.4% 2.0% 1.5% 10.1% 8.6% 8.8% 21.4% 20.3% 22.7% 2.0% 1.5% 1.4% 211.9% 235.4% 259.0% 21.4% 20.3% 22.7% 1.4 0.8 0.8 19.5 20.8 20.5 0.2 0.2 0.2 5.1 5.6 6.1 9.8 10.7 13.6 28.3 41.5 42.8 1.1 1.0 1.6 0.5 0.3 0.7 0.3 0.3 0.5 103.3% 131.4% 156.7% 48.7% 55.8% 60.5% 211.9% 235.4% 259.0% 7.10 9.79 9.68 0.14 0.15 0.14 5,843 4,240 4,285 293,038 275,050 299,402 23,894 17,448 18,841 1.74 APPENDIX 2 B AL A NC E SH E E T ( V N D b n ) QII-11 Assets 2,765.6 Current assets 1,494.1 Long-term assets 1,271.5 Fixed assets 351.9 Long-term investments 725.5 Resources 2,765.6 Liabilities 1,598.3 Current liabilities 748.5 Long-term liabilities 849.8 Equities 1,141.4 Equity 1,141.4 Contributed capital 600.0 QU AR T E R L Y R A T I O S QIII-11 3,143.4 1,814.0 1,329.4 413.3 720.8 3,143.4 1,984.7 1,136.2 848.5 1,131.5 1,131.5 600.0 QIV-11 2,916.7 1,606.7 1,310.0 412.4 702.1 2,916.7 1,769.9 847.7 922.2 1,120.2 1,120.2 600.0 QI-12 2,899.2 1,584.2 1,315.1 426.1 713.8 2,899.2 1,650.2 856.1 794.1 1,223.6 1,223.6 600.0 225.0 207.9 225.0 198.0 225.0 129.8 225.0 290.3 I NC O M E S T A T E M E N T ( V N D b n ) QII-11 Total Revenue 4,554.8 Net sales 4,542.4 COGS 4,401.8 Gross profit /(loss) 140.6 Financial income 26.7 Financial expense 32.4 Interest expense 28.1 Selling expenses 59.5 G&A expenses 19.8 Net operatiing profit 55.7 Other income 7.8 Other expenses 1.1 Profit /(loss) before tax 62.4 Corporate income tax 8.5 Profit after tax 54.0 Net profit 54.2 QIII-11 6,514.9 6,498.3 6,301.3 197.0 6.0 42.2 33.2 72.9 21.8 66.1 4.0 0.2 69.9 18.8 51.0 50.2 QIV-11 3,212.8 3,189.2 3,005.6 183.6 24.9 32.8 23.9 89.4 32.1 54.1 5.4 5.9 53.7 5.7 48.0 48.7 QI-12 2,054.0 2,035.9 1,829.9 206.0 21.9 29.1 29.0 74.0 21.0 103.9 20.6 7.1 117.3 25.1 92.2 93.4 Capital surplus Retained profits 20 | See Disclaimers at the end of the report Growth rate Revenue growth rate (Y-o-y) Gross profit growth rate (Y-o-y) Net profit growth rate (Y-o-y) Profitability ratio Gross margin EBIT margin Net profit margin ROA (4Q) ROE (4Q) Management ratio Receivable outstanding days Inventory outstanding days Payable outstanding days Liquidity ratio Current ratio Quick ratio Cash ratio Capital Structure Total debt/Total equity Total debt/total asset Total asset/total equity Index per share PE EPS (VND per share) QII-11 QIII-11 QIV-11 QI-12 6.7% 5% -16% 36.3% 60% -17% 15.0% 31% 42% -45.4% -8% 0% 3.1% 2.0% 1.2% 9.6% 21.7% 3.0% 1.6% 0.8% 8.4% 20.9% 5.8% 2.4% 1.5% 8.6% 21.8% 10.1% 7.2% 4.6% 8.4% 21.4% 1 18 0 1 13 2 1 29 0 2 51 0 1.8 0.8 0.5 1.8 0.8 0.4 1.4 0.8 0.5 1.8 0.7 0.4 140.0% 57.8% 242.3% 175.4% 63.1% 277.8% 158.0% 60.7% 260.4% 134.9% 56.9% 236.9% 10.3 4037 10.7 3871 10.1 4111 10.1 4108 REPORT TRACKING Reports issued Company Note Company Update 1Q12 Date 25/11/2011 10/5/2012 55.0 Recommendation Not Rated Not Rated PNJ 12M Target price NA NA Market price at issuing date 35,500 42,500 SBS target Price 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 SBS Research Guide to Investment Ratings Buy: Share price may exceed 15% over the next 12 months Neutral: Share price may fall within the range of +/- 15% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 15% over the next 12 months Not Rated (NR): Stock is not within regular research coverage 21 | See Disclaimers at the end of the report 48.8 DISCLAIMER The information and statements contained herein, including any expression of opinion, are based upon sources believed to be reliable but their accuracy, completeness, and correctness are not guaranteed. Expressions of opinion herein were arrived at after due and careful consideration and they were based upon the best information then known to us, and in our opinion are fair and reasonable in the circumstances prevailing at the time. Expressions of opinion contained herein are subject to change without notice. This document is not and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. SBS and other related companies and/or their officers, directors and employees may have positions and may have affect transactions in securities of companies mentioned herein and may also perform or seek to perform investment banking services for these companies. No person is authorized to give any information or to make any representation not contained in this document and any information or representation not contained in this document must not be relied upon as having been authorized by or on behalf of SBS. This document is private circulation only and is not for publication in the press or elsewhere. SBS accepts no liabilities whatsoever for any direct or consequential loss arising from any use of this document or its contents. The use of any information, statements forecasts and projection contained herein shall be at the sole discretion and risk of the users. This document is confidential and is intended solely for the use of its recipient. Any duplication or redistribution of this document is prohibited. Sacombank Securities Company Head office 278 Nam Ky Khoi Nghia street, District 3 Ho Chi Minh City Vietnam Tel: +84 (8) 6268 6868 Fax: +84 (8) 6255 5957 www.sbsc.com.vn Research Division Tel: +84 (8) 6268 6868 (Ext: 8763) Email: [email protected] Hanoi th 6 -7th Floor, 88 Ly Thuong Kiet Street Hoan Kiem District Hanoi Vietnam Tel: +84 (4) 3942 8076 Fax: +84 (8) 3942 8075 Email: [email protected] Cambodia Sacombank Securities (Cambodia) PLC 56 Preah Norodom Blvd Sangkat CheyChumneas, Khan Daun Penh, Cambodia Tel: +855 23 999 890 Fax: +855 23 999 891 22 | See Disclaimers at the end of the report Laos Lanexang Securities Public Company 5th Floor, LSX Building, Ban Phonthan Vientiane Capital The Lao P.D.R