{"id":37154,"date":"2019-10-18T17:35:29","date_gmt":"2019-10-18T10:35:29","guid":{"rendered":"https:\/\/yuanta.com.vn\/?post_type=phan-tich&#038;p=37154"},"modified":"2019-10-18T17:35:29","modified_gmt":"2019-10-18T10:35:29","slug":"update-pnj-recovery-from-erp-trouble","status":"publish","type":"phan-tich","link":"https:\/\/yuanta-uat.ysvn.com.vn\/en\/analysis\/update-pnj-recovery-from-erp-trouble","title":{"rendered":"[Update] PNJ &#8212; Recovery from ERP trouble"},"content":{"rendered":"<p><strong>Hold-Outperform<\/strong><\/p>\n<p><strong>Target price: VND 86,200<\/strong><\/p>\n<p><strong>Upside: 4.6%<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 14pt\"><strong>Event<\/strong><\/span><\/p>\n<p>PNJ released its 3Q19 results yesterday with a 25% YoY increase in sales and 17% Y0Y increase in PAT. This is a notable improvement compared to the YoY declines of -8% YoY in sales and -6% in PAT seen in 2Q19. The positive growth in 3Q19 indicates an operational recovery from the ERP problem and weak jewelry demand in the previous quarter.<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-size: 14pt\"><strong>Our take<\/strong><\/span><\/p>\n<p><strong>The strong 25% YoY growth in 3Q19 revenues boosted YTD revenue increase by 11%, reaching 65% FY19 of guidance. <\/strong>3Q19 sales were supported by the addition of 29 new stores, a rebound in jewelry demand, and success in its new jewelry offerings.<\/p>\n<p><strong>Net income in 9M19 (+16% YoY) has reached 68% of FY19 guidance. <\/strong>Gross margin increased slightly by 10bps YoY in 3Q19 to reach 19.1%, which management attributed to a more favorable product mix (i.e., a higher contribution from high-value jewelry). In addition, PNJ managed its operating costs effectively.<\/p>\n<p><strong>Management also attributed the recovery to increased effectiveness of its enterprise resource planning (ERP) system<\/strong>. Management noted that its employees have become more familiar with the new system and its operations are close to \u201cnormal\u201d conditions now, which is a contrast from 2Q19.<\/p>\n<p><strong>As we said in our most recent note titled <\/strong><a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2019\/07\/PNJ_2Q19-results-The-fat-hits-the-fire.pdf\"><strong>\u201cPNJ: The Fat Hits the Fire\u201d<\/strong><\/a><strong>, a slowdown in jewelry demand is much more of a concern <\/strong>than the ERP system problems. Thus the quarterly rebound in sales, while welcome, is insufficient to conclude that Vietnamese jewelry demand is returning to high-single-digit growth rates, in our view. Having said that, we see the rebound as a meaningfully positive signal. We expect a continued recovery in 4Q19, and we thus make no changes to our 2019 revenue and PAT forecasts.<\/p>\n<p><strong>We have a HOLD-Outperform rating <\/strong>but note that our expected 12-month total return is now just 6.4% (including the 2% dividend yield). Our target price is unchanged at VND 86,200 or 15x FY20E forward P\/E.<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<p><strong>Please access the link for our complete report: <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2019\/10\/20191018-PNJ-9M19_Edited.pdf\">20191018 PNJ 9M19_Edited<\/a><\/strong><\/p>\n<p><em>Analyst: Quang Vo,\u00a0<\/em><a href=\"mailto:quang.vo@yuanta.com.vn\"><em>quang.vo@yuanta.com.vn<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hold-Outperform Target price: VND 86,200 Upside: 4.6% &nbsp; Event PNJ released its 3Q19 results yesterday with a 25% YoY increase in sales and 17% Y0Y increase in PAT. This is a notable improvement compared to the YoY declines of -8% YoY in sales and -6% in PAT seen in 2Q19. The positive growth in 3Q19&#8230;<\/p>\n","protected":false},"author":10,"featured_media":0,"template":"","class_list":["post-37154","phan-tich","type-phan-tich","status-publish","hentry","analysis-category-company-update","analysis-category-consumer-discretionary"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.3 (Yoast SEO v23.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>[Update] PNJ -- Recovery from ERP trouble | Yuanta Vietnam<\/title>\n<meta name=\"description\" content=\"Hold-Outperform Target price: VND 86,200 Upside: 4.6% &nbsp; Event PNJ released its 3Q19 results yesterday with a 25% YoY increase in sales and 17% Y0Y\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"[Update] PNJ -- Recovery from ERP trouble\" \/>\n<meta property=\"og:description\" content=\"Hold-Outperform Target price: VND 86,200 Upside: 4.6% &nbsp; 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