PNJ’S FINANCIAL STATEMENT ANALYSIS 1 PNJ’S FINANCIAL STATEMENT ANALYSIS From the perspective of investors, we issue a BUY recommendation on PNJ The following factors warrant the BUY recommendation 1 PNJ has very strong comparative advantages and possesses a valuable opportunity for prosperous development In the first 6 months of 2016, GDP of Vietnam has decreased remarkably, mainly due to the impact of environmental factors In the first six months of 2016, the GDP has increased but the growth ra.
Trang 1PNJ’S FINANCIAL STATEMENT ANALYSIS
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Trang 2From the perspective of investors, we issue a BUY recommendation on PNJ The following factors warrant the BUY recommendation:
1 PNJ has very strong comparative advantages and possesses a valuable opportunity for prosperous development In the first 6 months of 2016, GDP of Vietnam has decreased
remarkably, mainly due to the impact of environmental factors In the first six months of
2016, the GDP has increased but the growth rate is still low more than 1% over the previous year In addition, inflation and rising gold prices also adversely affect the economic situa- tion in Vietnam, especially for companies producing and processing gold as PNJ But with those difficulties PNJ still stands and overcome, not only that PNJ is constantly expanding but growing.
2 The firm has steadily improved the cost efficient management The fact that the
company has expanded its production and business efficiency is reflected in the company’s gross profit margin increasing by 2014, 2015 and 2016 respectively: 889 billion, 1168 billion,
1411 billion After deducting expenses, PNJ’s after-tax profit for 2014, 2015 and 2016 is
255 billion, 75 billion, 450 billion respectively The reason for the low profitability of the year 2015 is that the economy fluctuates sharply, affecting profit from core business activities and other profit losses Although profit after tax in 2015 is so sharp, but by 2016, PNJ changed its business strategy and affirmed itself by 450 billion after-tax profit This shows that PNJ is a big company, capable of managing and operating a good business.
3 Financial risk and liquidity risk are moderate Through the comparison of asset
structure and capital, we see the company’s asset structure moving towards increasing short-term assets and decreasing the proportion of long-term assets Specifically, in 2015, the proportion of short-term assets is 64.73% and gradually increase to 2016 is 86.47% Changes
in short-term asset structure in this direction are considered ineffective Long-term assets of the company in 2015, long-term financial investment is only 5.6% and fixed assets increased slightly to 16.33%, 2016 does not make long-term financial investment and short- term assets the reduction to 11.59% In summary, PNJ’s asset structure tends to increase rapidly; The capital structure tends to increase slightly and more stable.
Trang 34 Profitability has improved and was higher than the industry average for almost
ratios The factor of profit and business are two closely related factors, turnover indi-
cates the role, position of the business in the market and profits show the quality and
efficiency of the end.
- Rate of return on turnover2014 = 3.6%
- Rate of return on tunrover2015 = 2.4%
- Rate of return on tunrover2016 = 6.9%
=> With a turnover of VND100 billion, the company generates 36 dong in 2014
Simi-larly, in 2015, the company generates 24 dong of profit and in 2016, it generates 69 dong.
This shows that the business role and effect of the business is quite good.
This shows that PNJ is a company with good management, professional and flexible
sleep The PNJ strategies used are well suited However, there are still some difficulties
but PNJ still skillfully overcome PNJ is constantly upgrading and expanding its system,
which is a good signal for investors Therefore, we will choose PNJ for investment.
Trang 41 GDP factor:
In the year 2016, Vietnam’s target is to achieve a growth
rate of 6.7%, but in consecutive years there are big changes
affecting the economy Natural disasters, droughts, floods,
etc., are the secondary cause of the decline in agriculture,
forestry and fishery, and the deepening of the mining
industry of 2016 did not reach the target Environment is also
an important factor influencing the growth rate, particularly
due to the impact of natural disasters, floods and droughts,
but the growth rate of Vietnam has decreased by 1%
equivalent about 1.7 billion Due to the strong influence
of environmental factors, the agriculture, forestry and
fisheries sector had negative growth in the first 6 months
The agriculture, forestry and fisheries sector showed
negative growth in the first and second quarters, but in the
third quarter, the growth rate increased and by the end of the
year, , 36% According to estimates by the General Statistics
Office, the value of agricultural, forestry and fishery
production in 2016 at constant prices reached
VND870.7 trillion, up 1.44% compared to 2015, lower
than with the increase in recent years (2015 increase of
2.62%, in 2014 increased 4%, in 2013 increased 3.6%, in
2012 increased
by 3%)
Industry and industry by the end of 2016 reached an
industry-wide increase of 7.5% compared to 2015, much
lower than the 9.8% increase in 2015 and 7.6% 2014 due to the
declining mining industry
The trade balance in 2016 focused on exports, leading
to the trade surplus of USD 2.68 billion, of which the
domestic economic sector was USD 21.02 billion, the FDF
was
23, $ 7 billion Export turnover in 2016 is estimated at 175.9
billion USD, up 8.6% over the previous year In particular, the domestic economic sector reached $ 50 billion, up 4.8%
Trang 5Source: http://cafef.vn
Source: http://cafef.vn
Source: http://cafef.vn
Trang 6The FDI sector (including crude oil) reached 125.9%,
up 10.2% Import turnover in 2016 is estimated at $ 173.3
billion, up 4.6% over the previous year, of which the
do-mestic economic sector gained $ 71.1 billion, up 4%; FDI
sector reached USD 102.2 billion, up 5.1%
CPI in the whole year 2016 increased 4.74%: CPI in
December 2016 increased 4.74% compared with December
2015, average monthly increase of 0.4% The average CPI in
2016 will increase by 2.66% over the average in 2015
Although the increase of 2016 is higher than that of
2015, it is still much lower than the average CPI of some
recent years and still within the 5% target set by the
Na-tional Assembly Given the difficult economic environment,
although the growth rate in 2016 is lower than the set target,
it is a success for Vietnam as it has overcome these
it will affect the safety of investing in national bonds or currencies To avoid these risks, investments can turn to precious metal investments Prices or other commodities may be affected and from affecting precious metals The price boost the growth card booster
The precious metals market has high payment transactions, can enter the order and exit the order several times in a minute.Thus, prices are prone to fluctuations in the short term without necessarily
following the long-term trend
Factors affecting the price of gold in Vietnam According to the convention on the world gold market, the unit price quoted is usually USD / ounce, 1 ounce = 1 troy ounce = 0.833 gold, 1 gold = 1.20556 ounce
Domestic gold market, unit price is usually in VND / volume, with public
The prices of gold from the world are as follows:
Gold price (VND / tael) = World gold price (USD / ounce) * 1.20556 * Billion -price VND / USD
From the above formula, it can be seen, the price of gold in Vietnam depends directly on theprice of gold
market South, affected by the stock market and macroeconomic factors in the country such as:
interest rate, price index
Trang 71 Sector overview
In the gold and silver jewelery market in Vietnam, PNJ and Bao Tin Minh Chau are well- known brands known by many consumers PNJ dominates the market with nearly 40% market share in the country Over the past 20 years of operation and development, PNJ has become one of the leading companies in the jewelry business in Vietnam and one of the largest enterprises inRegion 5 with the “Top 500 Leading retailers in Asia Pacific, “setting the record for” the first
enterprise to invest in the most modern and largest jewelry production technology in Vietnam “
in the south, Bao Tin Minh Chau dominates the northern market Apart from these two large
enterprises, there are about 10,000 small enterprises involved in manufacturing and trading in this field
2 Analysis of specific risks of PNJ
The development of the economy affecting the main business of PNJ is the production and trading of jewelery and precious stones This influence is reflected by the demand for jewelry
products will increase as the economy develops, the people’s life is increasing Conversely, whenthe economic downturn of consumption demand will decrease as this is not the essential commodi-
ty of life This is considered a big risk for PNJ
Risks from abnormal fluctuations in input material prices for jewelry production The dictable price of gold and silver materials will reduce business efficiency, increase costs, and make
unpre-it difficult for PNJ to set up business plans Especially the change of gold price will have a certain impact on PNJ’s operations
PNJ uses most of its short-term debt to finance inventory (mainly short-term gold loans) This fixes some of the risks from volatility of gold prices but will increase the risk from interest rates on bank loans
Exchange rate risk has a significant impact on PNJ’s business as most of PNJ’s raw materials are imported from abroad and PNJ also exports jewelery market
3, Analysis of revenue structure, cost and profit.
PNJ’s revenues and profits come from four main sources: jewelry, gas, seafood and financial investment Jewelry business is the main industry contributing most of revenue and profit to the company in recent years This is the PNJ industry has many strengths, has developed strongly in the past years and has great potential for development in the coming years
Trang 84, Vietnam steel industry prospects
SWOT ANALYSIS
- Over 20 years of experience in jewelry
industry, PNJ has built a strong brand
that many consumers believe.
- PNJ has a wide system of shops,
agents to serve the distribution and
introduction of products.
- PNJ is a founding shareholder of East
Asia Bank, which receives many
incentives from the bank in its financing
activities.
- Potential growth of jewelry industry in Vietnam is still great.
- With the current advantages, the ability
to expand and occupy the market of PNJ
in the future is very big.
- The real estate market is recovering, and joint ventures with PNJ will have more projects imple- mented, potentially contributing to PNJ’s profitabil- ity in the future.
- PNJ’s main business, manufacturing
jewelry
busi-ness is risky but difficult to predict and overcome.
- The profit from gas and fishery is not high.
- The current financial investment activities have
not brought significant profit to the company despite
the fact that financial investment accounts for a high
proportion of assets
- Increasing competition among enterprises in the jewelry industry both
at home and abroad.
- With a large financial investment capital, PNJ will face significant challenges if this investment is not effective.
Trang 95, SECTOR ANALYSIS BY MICHAEL PORTER’S 05 FORCES MODEL
a Impact from Supply: Jewelry industry in Vietnam is a specific industry, from raw materials
to machinery and equipment for production, most of them are imported from abroad Therefore, the pressure from suppliers is very large For physical gold items, the import and export activities are strictly controlled by the State, only a few enterprises are allowed to trade gold import andexport in certain periods For gold jewelry producers, besides the gold supply from the world, these enterprises also purchase gold from the people for production However, the supply of gold from the population depends on the price of gold The supply of jewelry in Vietnam is highlyimpacted and dependent on sources from overseas
b Impact from demand Jewelry is not essential commodity for life, so there will be
fluctuations in the development of the economy In the coming years, the demand of jewelry industry will increase in the world as the economy grows again In Vietnam, the demand for
beautification is increasing due to the improved income of the people With a large population, young people, the trend of consumption increases quickly, the demand for jewelry in Vietnam
is very large in the future The demand for gold bullion is affected by the hoarding, dedicationand speculative activity of investors However, the need for speculation only appears in the
context of economic instability, many investors find shelter where gold Therefore, in the
economic trend of recovery, the demand for gold bars for speculation will decrease in the future
c Alternative products Due to traditional Vietnamese habits, gold and silver jewelry
products are difficult to replace in holidays, Tet holidays, weddings Gold is also the preferred property Leading for hoarding purposes
d Barriers to market and potential competitors
businesses to participate These enterprises only engage in regular trading, import and export ofjewelry and are subject to competition among enterprises in the industry
for enterprises want to join the industry These barriers include technology barriers, capital,
branding and distribution systems
legal barriers for enterprises wishing to participate
e Competition of the same industry: With the participation of banks in the production and
trading of gold bars, gold jewelry will create competition for the industry in the future In
addition, Vietnam promises to be the destination of many big fashion brands of the world,
including jewelry items, businesses in the industry will have to compete strongly from both
domestic and foreign
Trang 10-Chairman of the board, General Director
precious stones, fashion accessories, souvenirs
Trading watches and buying gold bars
metals
retailer, holding the # 1 position in the medium
and high-end segments in Vietnam
exquisite jewelry products, superior quality
-Quality - Innovation – Mounting
Meaning of logo: Meeting and Shining
Ms Cao Thi Ngoc Dung
Trang 111 INCOME STATEMENT ANALYSIS
VALUE PROPORTION VALUE PROPORTION VALUE PROPORTION
Net profit from
operation activity 333,148 130% 197,097 186% 548,093 106%Profit from finacial
activity before
interest
8,167 3% (348,426) -329% (103,098) -20% Other profit 1,886 1% (9,985) -9% 42,535 8%Total accounting
profit before tax 255,351 100% 106,063 100% 517,432 100%
TABLE 2: COMPARE THE PROFIT STRUCTURE - UNIT: million
Net profit from operation activity (136,051) 6% 350,997 -13% Profit from finacial activity before
Total accounting profit before tax (149,288) 411,369
Table 1: First, we see that profit from operating
activity covers a large proportion of PNJ’s profit struc-
ture in 3 years
In 2014, Profit from financial activities before
interest was 3 percents That is the largest proportion,
however, it gradually drop The profit from financial
activities before interest percentage tremendously de-
creased 329% in 2015 and increased 309% in 2016 This
is a reasonable profit struture
The table 2 shows that the proportion of profit from operating activity has continuosly dropped over three years 2014, 2015 and 2016, exception the other profit increased In 2014, the pro- portion of profit from operating activity is more than 100% because of 1,885,914,261 VND
increasing of the other profit In 2015, proportion of profit from operating activity is 6% and covers
a large proportion of total amount of 2014 EBT increase On the other hand, other profit is still minus but we can see that in 2015, PNJ has its best profit structure
Going to 2016, proportion of profit from finacing activity jumps to 169%, covers a large pro- portion of total amount of 2016’s EBIT increase Besides, profit from operating activity falls leads to unsustainable profit structure
Source: Team analysis