PNJ likely to benefit from high inventories and rising gold price

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Workers preparing products at a PNJ store. Photo courtesy of PNJ

HÀ NỘI — The recent tension between Russia and Ukraine has boosted the prices of many commodities, including gold.

The spot gold price was US$2,019.6 an ounce at 14:30 local time on Tuesday. The metal hit the $2,000 mark, an all-time high since 2020 on Monday morning.

The gold rush is creating advantages for domestic gold traders, notably Phú Nhuận Jewelry JSC (PNJ), as it continuously increased its inventories before gold entered the rally.

In its consolidated report, by the end of 2021, PNJ’s inventory reached nearly VNĐ8.7 trillion (US$380 million), up by more VNĐ2.1 trillion compared to the previous year. Of which, finished products were worth nearly VNĐ5.2 trillion.

With a sharp rise in gold inventories at the end of 2021, investors expect PNJ’s business results to benefit in the first quarter of this year as the gold price surges. On the stock exchange, PNJ stock also posted strong performance. There was a time the company even surpassed VNĐ110,000 a share, an all-time high.

SSI Securities Corporation (SSI) forecasts that in 2022, PNJ’s inventory may increase to nearly VNĐ11 trillion.

PNJ’s report showed that in January, the company’s revenue reached nearly VNĐ3.5 trillion, up 60.2 per cent on-year, resulting in a rise of 60.7 per cent in profit after tax to VNĐ270 billion.

In its revenue structure, retail activity is dominant with nearly 62.1 per cent, while wholesale accounts for 12.9 per cent and revenue from gold bars accounts for 23.8 per cent. Notably, retail sales of the company in January increased by 79.9 per cent over last year, and revenue from gold bars also jumped 90.3 per cent.

Currently, PNJ has 338 stores nationwide. Thanks to the God of Wealth Day, the company’s business results are expected to have grown positively last month.

In 2021, PNJ recorded net revenue of nearly VNĐ19.6 trillion, up 11.9 per cent and completing 93.3 per cent of its yearly plan. However, its profit after tax fell 3.7 per cent to VNĐ1.03 trillion, which only achieved 84 per cent of the plan.

SSI estimates that in 2022, PNJ’s net revenue and net profit will reach VNĐ23.6 trillion, up 20.3 per cent and VNĐ1.42 trillion, up 37.4 per cent, respectively.

The securities firm recommended that investors still need to watch the situation to confirm the recovery of demand in the next few months, while the developments of COVID-19 could lead to a K-pattern recovery when the economy quickly picks up winners and losers, with further consolidation in the jewellery market. VNS

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