Market continues to correct actively at low liquidity, PNJ - A stock each day


- Vn-Index traded sideway in morning, reduced more in begining afternoon, but more buying orders help market to recover well from 2pm.
- Most big-cap stocks closed sideway near the reference price.
- Except VCB reduced by 1.6% due to its own story, other banking stocks just reduced slightly less than 1%.
- Liquidity reduced further: 22% higher than 20-day average, but 5.6% lower than last trading day.
- Foreigners slightly net sell today, but only focus on TIX (60 bill) - a quite small stock.


- Ms. Meng Wanzhou (CFO of Huawei) was arrested in Canada due to US governemnt requirement. This can lead to more tenssions between US and China.

- Retail oil price reduced nearly 1,500 VND per litre, inflation pressure in future can reduce.
- Mr. Can Van Luc (Head of Research at BIDV): risk for 2019 that interest rate increases and corporations are hard to get long-term and medium-term capital.
- VCB finished selling 23/7 mill MBB shares and 35 mill EIB shares.


Business model:
- PNJ is a jewelry retailer in which gold jewelry and silver jewelry account for 92% and 6% gross profit.
- PNJ's jewelry market share has grown steadily from ~ 12.5% in 2012 to 26.5% in 2017 and  28% now, far higher than other competitors such as Doji, SJC, and Bao Tin Minh Chau.(each with market share less than 10%).
- PNJ’s competitive advantage is its top creative design team with 1,000 high-grade jewelers.
- PNJ’s distribution network is also widespread with 298 stores and retail outlets (by 2ndQ 2018), which is 4.5-7 times higher than the number of SJC and Doji.
- PNJ’s strategy in the future: 1) Focusing on the ERP system helps to research customer actions better by tracking their actions at stores and forecasting their buying behavior and 2) expanding number of stores to take advantage of high growth in retail industry in Vietnam

Investment catalysts:
- Prospect of retail jewelry industry in Vietnam is very high with growth rate of ~ 15%/year based on high number of population of 96 million people, rapid population growth of 1.3%/year, high GDP growth and high income growth in Vietnam during past 20 years, and  Vietnam lowest ratio of household debt ratio on income in the world.
- PNJ will open ~40-45 new stores per year, concentrated in the South market, and growth rate of sales per shop is at 12%/year. In 2017, PNJ opened 54 new stores and plans to open 44 new stores in 2018. As expected, PNJ could reach 600-700 stores (up 123%-160% from current number of stores) in the long run before the industry becomes mature.
- The ERP system will help PNJ better understand customer buying behavior, thereby focusing on the preferred product groups.
- In Jun/2018, that Ms. Cuc (a BOD member) was arrested for involvement in violation at DAB, affected PNJ’s stock price (although this action did not affect business operation of PNJ at all).

Financial Statement Analysis:
Good financial position due to low liabilities to equity ratio at 0.62, and positive cash flows. In 2018, borrowing balance increased to invest for inventory to open more stores. PNJ made provision 100% for the investment in DAB already (value of 395 bill).