Phu Nhuan Jewelry Joint Stock Company (PNJ), chaired by Ms. Cao Thi Ngoc Dung, has just reported its preliminary business results for January 2024 with quite surprising figures after recording profits in the fourth quarter of 2023 and the whole year of 2023 soaring to a record high.

In January 2024, Phu Nhuan Jewelry of the "money queen" continued its strategy of expanding its chain of gold, silver, jewelry and gemstone retail stores, opening 2 new stores, bringing the total number of stores and business centers to 402.

However, PNJ’s business results in the first month of the new year decreased sharply compared to the same period last year, both in terms of revenue and profit. Revenue decreased despite the addition of more stores and profit decreased even more sharply despite the gold price being at an all-time record high.

Accordingly, in January, PNJ recorded net revenue of VND3,829 billion, down more than 7% compared to the same period last year. Profit after tax decreased by 18.6% to VND245 billion.

PNJ's profits decreased even though the price of gold rings and jewelry gold in early 2024 was at an all-time high, around 65-66 million VND/tael. The difference between buying and selling gold prices was also quite large, 1-2 million VND/tael.

The average gross profit margin in January 2024 also decreased to 17.2%, compared to 18.2% in the same period in 2023.

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PNJ's business results in January 2024 decreased quite sharply. Source: PNJ

The reason for the decrease in revenue and profit in January of Ms. Cao Thi Ngoc Dung's business is that purchasing power in the first month of the year was still low as the Lunar New Year and God of Wealth festival this year were later than last year, falling in February.

With seasonal factors and shopping behavior in the Vietnamese consumer market in January and February depending on the lunar cycle, with major holidays such as Lunar New Year and God of Wealth Festival, it is likely that PNJ's revenue and profit will increase sharply in February.

The decline in January is also due to the high base in January 2023 (Lunar New Year month).

However, the sharp decline has also surprised many people. PNJ shares have also recently decreased significantly after reaching a historical peak at the end of January 2024. PNJ fell from VND92,000/share at the end of January to VND88,400/share by the end of February 21.

PNJ shares also fell sharply on the God of Wealth's day, February 19 (January 10).

The surprise was that in January, people rushed to buy gold rings and pushed the price of this item to a historic peak of 64-66 million VND/tael in the context that the price of national brand SJC gold bars was much higher than the world price, the difference was up to 17-19 million VND/tael.

High demand, gold tycoons benefit

The reason why people tend to buy gold rings in the first 2 months of 2024 is because holding gold rings and gold jewelry can be more profitable than gold bars. Many people are concerned that if the State Bank changes its gold market management policy and reconsiders the monopoly, the price of SJC gold may fall sharply, closer to the converted world price.

Besides, January 2024 is also the time near Lunar New Year, many people organize weddings, the demand for this type of gold increases.

Although the price of gold rings and jewelry gold is at a record high and is about 4-6 million VND/tael higher than the converted world gold price and the difference between buying and selling prices of gold trading enterprises such as PNJ is quite high, the profit margin has not shown any signs of increasing again.

The reason may be that businesses are not allowed to import gold for jewelry.

The fact that authorities have stepped up their crackdown on illegal gold trading rings in the past few years, including the prosecution of the Chairman of Phu Quy Gold Company for tax evasion for his involvement in the smuggling of 3 tons of gold from Laos to Vietnam in mid-2023,... could also make the supply of raw gold on the market more scarce.

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Demand for gold is forecast to grow positively in 2024. Photo: PNJ

Although the stock price has recently decreased, PNJ's prospects are still considered quite bright as Vietnamese people's demand for gold is still increasing strongly, gold prices are on an upward trend in the long term and PNJ continues its strategy of expanding market share.

PNJ shares fell after a sharp increase at the end of 2023. In just the last 2 months of 2023, this stock increased by nearly 30%, from VND 70,000/share to over VND 90,000/share.

In 2024, the world gold price is forecast to reach a new peak after the US Federal Reserve (Fed) may reverse its monetary policy, lowering interest rates from June 2024. The USD will go down and the gold price will increase.

ANZ Bank experts predict that gold prices will reach $2,200/ounce in 2024. WisdomTree fund predicts that the precious metal will reach $2,300/ounce.

Domestic gold jewelry consumption is forecast to grow positively in 2024 as the economy recovers more strongly and people's incomes improve. According to SSI Research, jewelry consumption is expected to increase by a single digit in 2024, after decreasing by about 10% in 2023.

With PNJ, this business can record higher revenue than the average due to gaining more market share from a long-term strategy.