CF09-Team-2-Report-1

GROUP ASSIGNMENT COVER SHEET
STUDENT DETAILS
Student name: Lê Nhã Nhật Hân Student ID number: 31221024468
Student name: Nguyễn Quỳnh Mai Student ID number: 31221023331
Student name: Nguyễn Chu Nguyệt Minh Student ID number: 31221026796
Student name: Trần Nhật Quang Student ID number: 31221026606
Student name: Lê Quỳnh Thy Student ID number: 31221022577

UNIT AND TUTORIAL DETAILS
Unit name: Corporate Finance Unit number: CF-DH48ISB-09

Tutorial/Lecture: Lecture Class day and time: 15:30 P.M., Friday
Lecturer or Tutor name: Mr. Hong Ngoc Nguyen (Ruby)
ASSIGNMENT DETAILS
Title: Final Report

Length: 51 pages Due date: 05//01/2024 Date submitted: 07/01//2024
DECLARATION
I hold a copy of this assignment if the original is lost or damaged.

I hereby certify that no part of this assignment or product has been copied from any other student’s work
or from any other source except where due acknowledgement is made in the assignment.
I hereby certify that no part of this assignment or product has been submitted by me in another
(previous or current) assessment, except where appropriately referenced, and with prior permission
from the Lecturer / Tutor / Unit Coordinator for this unit.
No part of the assignment/product has been written/ produced for me by any other person except
where collaboration has been authorised by the Lecturer / Tutor /Unit Coordinator concerned.
I am aware that this work may be reproduced and submitted to plagiarism detection software programs
for the purpose of detecting possible plagiarism (which may retain a copy on its database for future
plagiarism checking).
Student’s signature: Han
Student’s signature: Mai
Student’s signature: Minh
Student’s signature: Quang
Student’s signature: Thy

INTERNATIONAL SCHOOL OF BUSINESS
UNIVERSITY OF ECONOMICS - HCMC
FINANCIAL ANALYSIS & FORECASTING

EQUITY EVALUATION
FINAL PROJECT REPORT
Team 2
Lê Nhã Nhật Hân - 31221024468
Nguyễn Quỳnh Mai - 31221023331
Nguyễn Chu Nguyệt Minh - 31221026796
Trần Nhật Quang - 31221026606
Lê Quỳnh Thy - 31221022577
CF-DH48ISB-09: Corporate Finance

Mr. Hong Ngoc Nguyen (Ruby)
5th January, 2024
2
TABLE OF CONTENTS
EXECUTIVE SUMMARY 5
ASSIGNMENT 1: FINANCIAL ANALYSIS AND FORECASTING 6
I. Company overview 6
1. General Information 6
2. Main business fields 6
3. Ticker Symbol: PNJ 7
4. Stock Exchange 7
5. Company size 7
6. Board of Directors 7
7. Subsidiaries 8
II. Balance sheet analysis 8
1. Total current assets and non-current assets 9
a) Total current assets 9
b) Total non-current assets 10
2. Total liabilities and stockholders’ equity 12
a) Total current liabilities 12
b) Total non-current liabilities 13
c) Total stockholders’ equity 14
III. Income statement analysis 15
1. Net revenues 15
2. Cost of goods sold 17
3. Earnings before interests & taxes 18
4. Earnings per common share 19
IV. Ratio analysis 20
1. Short-term solvency ratios 20
a) Current ratio 20
b) Quick ratio 21
c) Cash ratio 22
2. Efficiency ratios 23
a) Inventory turnover ratio 23
b) Receivables turnover ratio 24
c) Total asset turnover ratio 25
3. Long-term solvency ratios 26
a) Total debt ratio 26
b) Debt-equity ratio 27
c) Time interest earned ratio 28
d) Equity multiplier 29
4. Profitability ratios 30
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a) Profit margin 30
b) Return on assets 31
c) Return on equity 32
d) EBITDA margin 33
5. Market value ratios 34
a) Price-to-earnings ratio 34
b) Market-to-book ratio 35
IV. Forecasting and scenario analysis 35
1. Forecasting 35
a) Forecast income statement 35
b) Forecast balance sheet 38
c) Forecast statement of cash flow 41
2. Scenario Analysis 42
a) Best case scenario 43
b) Worst case scenario 43
V. Conclusion 43
1. Strengths 43
2. Weaknesses 44
ASSIGNMENT 2: EQUITY VALUATION 45
I. Free cash flow to equity 45
II. Cost of equity 47
1. Risk-free rate 48
2. Market return 49
3. Beta 49
4. Cost of equity 50
III. Terminal value 51
1. Growth rate 51
2. Terminal value 52
IV. Equity valuation 53
V. Conclusion 55
REFERENCES 57
APPENDIX 61
4
EXECUTIVE SUMMARY
This report provides an in-depth understanding of the jewellery industry through a

comprehensive examination of the financial performance of PHU NHUAN JEWELRY
JOINT STOCK COMPANY (PNJ) in recent years.
This report comprises two sections. In the initial segment, we present a brief
overview of PNJ's background, followed by an analysis of critical financial aspects such as
the balance sheet, income statement, and critical financial features. The evaluation involves
the analysis of liquidity ratios, efficiency ratios, long-term solvency ratios, profitability
ratios, and market value ratios. The conclusion highlights key findings derived from
comparing these ratios with those of a comparable company, offering insights into the
impact of the COVID-19 pandemic on jewellery consumption and Vietnam's jewelry
industry. Additionally, the report provides a financial forecast for PNJ in the upcoming three
years (2023, 2024, and 2025). We forecast the financial performance of PNJ by using
historical data and references from the financial forecast PNJ made by itself.
In terms of financial assessment, PNJ exhibits strong cash flow, as evidenced by its
high inventory turnover, efficient receivables turnover, a consistently improving time
interest earned ratio, and a positive recovery trend in the ROA ratio over the past three
years. Nevertheless, external conditions, notably the repercussions of the COVID-19
pandemic and economic downturn, posed challenges for the firm. Specifically, between
2023 and 2025, we estimate that PNJ will encounter an upward trend of Net revenue
throughout 3 years, face fluctuating profit margins, and witness a decrease in its non-current
assets. Looking ahead, the balance sheet is projected to maintain a healthy growth, the net
cash flow is also predicted to increase every year, with 2024 expected to be the turning
point. In terms of income statement forecast, the net income is expected to go through a
steady rise.
In the second section, we extend the analysis to evaluate the firm’s equity by
calculating the firm's free cash flow to equity first and systematically determining cost of
equity based on the Capital Asset Pricing Model (CAPM), calculating the terminal value
and growth value of the company, finally using Discounted Cash Flow (DCF) approach to
ascertain the firm's equity valuation. Based on the findings, it is estimated that the current
stock is undervalued compared to its intrinsic value. Therefore, investors should exercise
caution and carefully weigh the risks and benefits before making investment decisions.
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ASSIGNMENT 1: FINANCIAL ANALYSIS AND FORECASTING
I. Company overview
1. General Information
PHU NHUAN JEWELRY JOINT STOCK COMPANY (PNJ) is a Vietnamese joint

stock company established on April 28, 1988, and is headquartered at 170E Phan Dang Luu
Street, Ward 3, Phu Nhuan District, Ho Chi Minh City, Vietnam. PNJ has emerged as the
premier jewellery manufacturer and retailer in Asia, specializing in the production and trade
of gold, silver, gemstone jewellery, business gifts, fashion accessories, souvenirs, watches,
and the buying and selling of gold bars. Additionally, PNJ provides inspection services for
diamonds, precious stones, precious metals, and real estate (Phu Nhuan JEWELRY JOINT
STOCK COMPANY (PNJ), 2021).
In 2019, PNJ achieved remarkable milestones by surpassing its designated target,

generating a profit before tax (PBT) of 1,500 billion VND. The company also garnered
prestigious awards, including Retailer of the Year at the JNA Awards, recognition among the
Top 50 listed companies, and the National Brand title for the sixth consecutive year.
Aligned with its vision of becoming the foremost company in Asia for jewelry
manufacturing and beauty product retailing, PNJ is committed to continuous innovation.
The company strives to deliver exquisite products of genuine value, celebrating the beauty
inherent in people and life while expanding its influence globally.
Summarised relevant information (About PNJ, n.d.):
● Name of company: PHU NHUAN JEWELRY JOINT STOCK COMPANY

● Abbreviation: PNJ.,JSC
● Postal address: 170E Phan Dang Luu Street, Ward 3, Phu Nhuan District, HCMC
● Website: https://www.pnj.com.vn/
● Independent (external) audit firm: PwC Vietnam Limited, Deloitte Vietnam Limited
2. Main business fields

● Producing and trading jewelry, fashion accessories, and souvenirs.
● Trading watches and gold bars.
● Diamond, precious stones & precious metal inspection services.
● Trading in real estate.
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3. Ticker Symbol: PNJ
4. Stock Exchange
The company has been listed on the Ho Chi Minh Stock Exchange (HOSE) with PNJ
code since 23 March 2009 (VietstockFinance).
5. Company size
The PNJ Factory, one of the largest jewelry factories in Asia, has a production
capacity exceeding 4 million pieces annually and employs over 1200 individuals. As of
December 31, 2020, the workforce totaled 4609, expanding to around 6500 people in 2021
(PNJ: number of employees 2021, 2021). Furthermore, as of December 31, 2020, the
company has 56 branches and 334 retail shops in different provinces and cities throughout
Vietnam.
6. Board of Directors
BOD Members Positions Education

Bà Cao Thị Ngọc Dung Chairman of BOD Bachelor of Economics
Ông Lê Trí Thông CEO/Vice Chairman of BOD Master of Business
Administration/Technology Engineer
Bà Tiêu Yến Trinh Member of BOD Bachelor of Foreign Languages
Bà Trần Phương Ngọc Thảo Member of BOD -
Ông Nguyễn Ngọc Văn Quân Acting Director -
Ông Đào Trung Kiên Member of BOD Master of Business Administration
Bà Đặng Thị Lài Member of BOD/ Bachelor of Economics
Finance Director
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Ông Dương Quang Hải Chief Accountant Bachelor of Laws/
Bachelor of Economics
Ông Lê Quang Phúc Member of BOD/ Irrigation Construction Engineer
Head of Audit Committee
Bà Huỳnh Thị Xuân Liên Member of BOD/Member of Bachelor of Marketing
the Audit Committee
Ông Nguyễn Tuấn Hải Member of BOD/Member of Bachelor of Foreign
the Audit Committee Languages/Master of Business
Administration
(VietstockFinance, 2023)
7. Subsidiaries
As of 31 December 2020, the company’s subsidiaries were:
● CAO Fashion Company Limited (CAF) – Subsidiary
● PNJ Laboratory Company Limited (PNJL) – Subsidiary
● Customer Era Company Limited (CECL) – Subsidiary
● PNJ Jewelry Production and Trading Company Limited (PNJP) – Subsidiary
II. Balance sheet analysis

The following common-size balance sheet provides a snapshot of PNJ's current and
non-current assets, as well as its current and non-current liabilities, showcasing the
stockholders' equity for the consecutive years 2020, 2021, and 2022.
In general, PNJ underwent a gradual rise in both total assets and total liabilities and
equity from 2020 to 2022. The gradual increase in total assets stemmed from the increase in
current assets, which accounted for the majority of the total. On the contrary, the decrease in
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non-current assets throughout the period referred to PNJ lessening the investment in fixed
assets. Additionally, the company consistently maintained total equity exceeding total
liabilities throughout this period, with fluctuations observed in current liabilities,
non-current liabilities, and equity.
1. Total current assets and non-current assets
a) Total current assets

In 2020, PNJ's current assets constituted 84.21% of its total assets. Over the
subsequent two years, this percentage experienced a gradual ascent, reaching 87.51% in
2021 and further rising to 89.72% in 2022. This upward trend can be attributed to the
notable augmentation in both short-term receivables and inventory levels during this period.
Additionally, the inclusion of a sum of short-term investments in 2022, which had not been
included in the preceding two years (2020 and 2021), played a role in the progressive rise in
the proportion of total current assets.
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When comparing the data for PNJ and SJC, it is evident that the percentage of total
current assets for PNJ showed a gradual increase over the three years, while the proportion
for SJC experienced fluctuations during the same period. Specifically, by the end of 2020,
PNJ's figure was 84.21%, which was lower than SJC's 88.17%. However, PNJ's proportion
saw a significant rise in the following year, reaching 87.51%, surpassing SJC's proportion
for 2021, which stood at 84.34%. Although SJC's figure rebounded after the decline in 2021
to 87.66%, it remained lower than PNJ, which recorded 89.72% at the same time. The
higher percentage of current assets for PNJ suggests stronger liquidity and greater efficiency
in meeting short-term financial obligations.
b) Total non-current assets

Concurrently, the proportion of non-current assets exhibited a descending trajectory,
declining from 15.79% in 2020 to 12.49% in 2021, ultimately settling at 10.28% in 2022.
The principal factor contributing to this decline was the substantial reduction in the quantity
of fixed assets within the company. The decrease in fixed assets played a pivotal role in
shaping the altered composition of PNJ's asset distribution during this timeframe.
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When comparing the proportion of non-current assets between PNJ and SJC, it is
noticeable that PNJ's figure gradually decreased over the three years, while SJC's figure
exhibited fluctuations during the same period. Specifically, at the end of 2020, PNJ had a
proportion of 15.79%, which was higher than SJC's 11.83%. The proportion for PNJ in 2021
experienced a significant decline to 12.49%, lower than SJC's proportion for that year,
which was 15.66%. In 2022, both PNJ and SJC saw a decrease, but the proportion of SJC
remained higher than PNJ, standing at 12.34% and 10.28%, respectively. In summary, the
lower percentage of non-current assets for PNJ suggests that PNJ may be less sustainable in
the long term.
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2. Total liabilities and stockholders’ equity
a) Total current liabilities

In 2020, the proportion of current liabilities in relation to total liabilities and equity
stood at 38.10%. By 2021, this percentage experienced a noteworthy surge, reaching
42.97%, a significant increase in that particular year. The notable increase in 2021 was
primarily propelled by a concurrent rise in short-term borrowings and the introduction of a
new account, specifically a provision for short-term critics. Despite a subsequent increase in
the amount of current liabilities in 2022 compared to 2021, it constituted only 36.61% of
total liabilities and equity, reflecting a slight decrease from the previous year. This decline
may be attributed to the substantial rise in total equity during this period.
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Continuously comparing the figures of PNJ and SJC regarding current liabilities, it is
evident from the chart that the proportion of PNJ consistently remained significantly higher
than that of SJC over the three years, and both figures experienced fluctuations during this
period. The proportion for PNJ from 2020 to 2022 was 38.10%, 42.97%, and 36.61%,
respectively. In contrast, the proportion for SJC was consistently lower than that of PNJ over
the same three-year period, with figures of 17.56%, 7.87%, and 10.69%, respectively. This
suggests that PNJ appears to face challenges in managing its short-term debt effectively,
making it more prone to risk.
b) Total non-current liabilities

Concerning non-current liabilities, the figures exhibited fluctuations across the three
years, rising from 0.11% in 2020 to 0.41% in 2021, followed by a significant decrease in
2022 to just 0.07%. These fluctuations are likely linked to variations in the provision for
long-term liability, which witnessed a substantial increase in 2021 and a subsequent decline
in 2022. Furthermore, in 2021, PNJ implemented a new business strategy involving
increased investments and technological upgrades supported by new equipment. This
resulted in a marginal increase in the proportion of non-current liabilities in 2021.
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Upon reviewing the chart, it is obvious that SJC consistently exhibited a higher
percentage of non-current liabilities compared to PNJ over the three-year period. The
proportion of SJC followed an upward trajectory, increasing from 0.29% in 2020 to 0.43%
in 2021 and further to 0.53% in 2022. In contrast, PNJ started with 0.11% in 2020,
experienced a substantial increase to 0.41% in 2021, and concluded with 0.07% in 2022.
The lower percentage for PNJ indicates that PNJ may carry a lesser burden of debt and a
lower level of financial risk.
c) Total stockholders’ equity

The percentages representing total equity demonstrated a modest fluctuation, starting
at 61.79% in 2020, dipping to 56.62%, and then rebounding to 63.31%, marking the highest
total equity figure over the three years. This fluctuation can be attributed to changes in the
amount of capital and reserves. The reason for this was PNJ's recovery post-COVID-19,
during which they actively sought to expand their business. Consequently, an influx of
investors and increased capital investment in their company occurred, resulting in a higher
proportion of equity by the end of 2022. The rise in total equity in 2022 likely played a
crucial role in the overall dynamics of the company's financial structure during this period.
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In terms of the percentage of total equity for PNJ and SJC, PNJ consistently had a
lower figure than SJC over the three-year period. Despite a 1.52% increase from 2020 to
2022, PNJ's percentage remained significantly lower compared to the 6.63% increase
observed for SJC during the same period. In essence, this indicates that PNJ retains a less
robust financial position and a higher degree of financial risk when compared to SJC.
III. Income statement analysis

1. Net revenues
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In general, the net revenue of PNJ increased over the 2 years, from 2020 to 2022.
There is a slight increase of 11.63% in net revenue at the end of 2021 compared to the net
revenue at year end of 2020. This minimal growth could be attributed to the COVID-19
Lockdown according to the regulations and PNJ's successful new business models this year.
The net revenue then continued to experience a significant rise of 73.31% in 2021. One
contributing factor to this dramatic rise was the market's recovery after the pandemic. PNJ
also launched several Marketing campaigns to attract and create value for their consumers,
which led to increasing net revenue at the end of this period.
In terms of common in-size analysis, when comparing the proportion of net revenue
between PNJ and SJC, it is noticeable that the SJC company did not have Revenue
deductions from 2020 and 2022, which means the proportions of net revenue in SJC were
higher than those of PNJ in this period. Specifically, the proportion of PNJ in 3 years
fluctuated, while that of SJC still maintained 100% of the total revenue. The figure for PNJ
rose slightly to 99.04% at the end of 2021 then decreased gradually to 99.02% in 2022. The
reason for the reduction of 0.02% was due to a doubling in revenue deductions from 2021 to
2022.
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2. Cost of goods sold
The cost of goods sold is a crucial factor in evaluating a company's financial

performance because it mainly determines the gross profit and indicates how successful the
business is. In detail, the percentage of the cost of goods sold saw an upward trend over
time, reaching 81.70% of the total revenue in 2022. The reason behind this trend was the
perception of many Vietnamese people about gold. They consider gold as a safe haven in
times of market volatility, which leads to high demand amid economic and geopolitical
uncertainty. Additionally, after the pandemic, the retail market is more vibrant. As a result,
PNJ increases the number of goods produced due to the rising demand, which leads to an
increase in COGS.
When comparing the figure for PNJ and SJC in terms of Cost of goods sold, it is
noticeable that both two companies did not experience any significant change in the
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percentage of COGS. In general, the percentage of COGS in total revenue in PNJ was
consistently lower than that of SJC in the same period. However, the proportion of COGS in
PNJ increased gradually over time, while the percentage of SJC reached a peak at the end of
2021 and then decreased slightly to 99.08% at the year-end 2022.
3. Earnings before interests & taxes
Within the company, it can be seen that there was a decrease from 2020 to 2021 in
total expenses before income taxes of Phú Nhuận Jewelry Joint Stock Company (PNJ). In
2020, the figure for total expenses before income taxes was 8.53 % of the total revenue.
Moreover, the number went down slightly to 7.14% in 2021. This percentage still decreased
slightly to 7.09% at the end of the period. However, in terms of change in the percentage of
EBIT, the percentage decreased in 2021 by 6.60%, while 2021 experienced a significant
rise in total expense before income taxes, which was a 72% growth in total expense. As PNJ
develops systems, invests in human resources, and digitalizes technology in order to
increase its competitive edge in the market, the total expenses would go up during this
period.
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In comparison with SJC company, using the common size analysis, the percentage of
EBIT in total revenue of SJC was consistently lower than that of PNJ. Specifically, the
figure for SJC went down from 0.44% in 2020 to 0.17% in 2021, which was lower
significantly than that of PNJ, 8.53% and 7.14% respectively. However, the proportion of
SJC company rose slightly to 0.33%, whereas that of PNJ declined to 7.09% at the end of
the period. The reason why the percentage of EBIT in SJC was lower than that of PNJ was
due to the high revenue but a very small amount of EBIT during the 3-year period.
4. Earnings per common share
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EPS is a tool that market players typically employ to evaluate a company's
profitability prior to purchasing its shares. Overall, the EPS experienced a fluctuating trend
over the 3 consecutive years. In detail, the EPS in 2020 gradually decreased to 4197 EPS in
2021 and then grew to 5223 EPS at the end of the period. Additionally, the EPS growth rate
went up significantly during the 2020 - 2022 period, specifically, from -2.58% to 24.45% in
2022. The EPS index increased in 2022 because of PNJ growth after the Covid-19
pandemic. The sales increase, and revenues increase which attracts more investment capital
into the company, leading to the stock valuation votes increase, explaining why the EPS
index increases. With regards to the EPS of SJC company, this is a single-member limited
liability company, therefore, the company does not issue shares.
IV. Ratio analysis

1. Short-term solvency ratios
a) Current ratio
Current ratio of Phu Nhuan Jewelry saw a fluctuating trend during a three-year
period from 2020 to 2022. Although this ratio declined by approximately 8% from 2020
(2.21 times) to 2121 (2.04 times), the firm still had sufficient current assets to meet its
short-term obligations. This was demonstrated by the fact that the firm was able to maintain
its current ratio above 2.0, considered as a healthy ratio since with each liability PNJ owed,
the company had more than two assets to pay off its debts. In 2022, the current ratio of PNJ
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increased significantly by 20% from 2.04 times in 2021 to 2.45 times in 2022. This change
resulted from a substantial rise of over 2 trillions in its current assets over the period
between 2021 and 2022 (See appendix 1). The higher current ratio of PNJ indicated a
stronger ability to repay its short-term debts. In comparison, the ratio of SJC was more than
three times higher that of PNJ with the yield of 8.96 times (2020), 10.71 times (2021) and
8.2 times (2022). This suggested that SJC was more able to meet short-term obligations and
more likely to reserve cash instead of reinvestment compared to PNJ.
b) Quick ratio
Overall, PNJ’s quick ratio saw an oscillation over a three-year duration between
2020 and 2022. In 2021, the rate fell to 0.12 whereas this number was higher (0.19 times) in
the previous year. This downward trend could be attributed to the effect of COVID-19
pandemic where the demand for jewlery decreased and the amount of inventory went up,
leading to the reduction in the liquidity of the firms in the short-term, specifically the quick
ratio. In 2022, this number doubled to 0.3, indicating that the firm became more liquid. For
SJC, the ability to repay short-term debts using the most liquid assets in 2020 was much
riskier than PNJ as its quick ratio only stood at 0.03. However, between 2021 and 2022, this
situation was recovered with the ratio of 1.83 times in 2021 and 1.89 times in 2020, almost
doubling the number of PNJ in the same period.
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c) Cash ratio
The cash ratio of PNJ experienced the same pattern as that of current ratio and quick
ratio. This number started at 0.13 in 2020 then slightly declined to 0.08 in 2021 and
constantly recovered at 0.18 in 2022. As a general rule of thumb, a ratio under 0.5 is viewed
as risky because the firm has twice as much short-term liabilities compared to cash (Kenton,
2022). The cash ratio of PNJ indicated that the firm struggled to cover its short-term
obligations using only cash and cash equivalents in the mentioned period. In comparison,
SJC experienced a fluctuating trend with the ratio starting at 1.8 in 2020, then declined to
1.28 in 2021 and slightly rose to 1.48 in 2022. This number suggested that in terms of using
cash and cash equivalents to pay off short-term debts, SJC was more able to meet these
obligations compared to PNJ.
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2. Efficiency ratios
a) Inventory turnover ratio
The inventory turnover ratio is a useful instrument when evaluating the company’s
inventory management efficiency and making crucial decisions regarding purchasing
strategies, production planning and inventory levels (Fernando, 2023). In general, the
inventory turnover ratio of PNJ recovered gradually over three years. Between 2020 and
2021, this number nearly remained constant around 2.1 times. Year 2022 underwent
considerable growth, rising 38% to 2.9 times. This increase resulted from the recovery of
the retail market after COVID-19 pandemic and the company’s effectiveness in marketing
implementation in accordance with the change in the market context and customer
behaviours. (PNJ, 2022) The inventory turnover ratio of PNJ demonstrated that the firm has
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become more successful in converting its inventory into sales and optimizing its inventory
levels. For SJC, this number was more than 4.5 times higher with 21.66 times in 2020, 15.51
times in 2021 and 13.13 times in 2022. This showed that PNJ was more efficient in
managing inventory compared to SJC.
b) Receivables turnover ratio
Receivables turnover ratio of PNJ experienced a continuous growth over a three-year

duration ranging from 2020 to 2022. In 2020, the rate started as 93 times, then slightly
increased by 13% and 10% in 2021 (105 times) and 2022 (115 times) respectively. The
firm’s high receivables turnover rate was attributed to the fact that PNJ adopted a
conservative credit policy and only extended credit to consumers having excellent credit
ratings. This high ratio suggested that PNJ has been efficient in collecting account
receivables and maintaining a healthy cash flow (PNJ, 2023). High ratio is also attractive to
investors. Compared with PNJ, SJC had higher receivables turnover ratio with the yield of
291, 232, 390 in the mentioned period respectively, indicating this firm took longer times
for this firm to collect credits from consumers.
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c) Total asset turnover ratio
The Total Assets Turnover Ratio (TAT) represents the operating efficiency of a
company, as it measures the assets utilization and later on could determine its desirability in
the eyes of investors (Patin et al., 2020). A higher ratio is favourable, as it indicates a more
efficient use of assets and for PNJ, their TAT stood at 2.084 in 2020, which means that for
every dollar of their assets, they would get $2.084 in sales. For SJC, however, their figure
was 7 times as high at 14.244, meaning they gained $14.244 in sales for each dollar of asset.
In 2021, PNJ’s figure slightly dropped to about 2.066, while that of SJC saw a much more
significant decrease of over 25%; this decrease was attributed to the impact of the
COVID-19 pandemic when consumers were stocking up on necessities and planned
expenditures for jewellery plummeted (Deloitte, 2021). One year later, the TAT ratio
reached a peak for PNJ in the three-year period at 2.856 with a 38% increase. This indicated
that PNJ was making more sales than ever in 2022 after two years of being affected by the
pandemic. SJC recorded an even greater yield of 15.937 in 2022, which likely indicates a
promising development from the company. It is important to take into account that SJC
achieved such high ratios due to their ability to reach 14-digit figures in sales while owning
much fewer assets than PNJ (approximately 1/8, 1/10, 1/13 in 2020, 2021 and 2022
respectively).
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3. Long-term solvency ratios
a) Total debt ratio
The Total Debt Ratio measures debt as a percentage of a company’s assets, a high
ratio means that the company is borrowing more money than what it could actually pay
(Peterdy, 2023). In 2020, this number for PNJ was 0.382, which means that over a third of
PNJ’s assets were debt and borrowings. Meanwhile, this figure for SJC was only at 0.078 -
only 7% of the company’s assets were debt and borrowings. In 2021, there was an increase
to 0.434 or a 13.6% increase for this ratio. PNJ borrowed more money in 2021 so almost
half of its assets were debt and borrowings during this year. 2022 saw an all-period low
from this ratio with only 0.367, a smaller figure than that of the initial year. It can be
deduced that PNJ had paid its debt and borrowings from the year 2021, which is why its
debt-as-an-asset percentage decreased. For SJC, the company’s total debt ratio saw a gradual
increase and ended at 0.106, which was a 37% increase over the three years.
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b) Debt-equity ratio
The Debt to Equity Ratio calculates the value of total debt and financial liabilities
against the total shareholder's equity. Because risks are inherently unfavourable investors
would prefer a lower D/E ratio, as it indicates that the company can meet the long-term
obligations of its lenders and its shareholders (Investopedia, 2023). In the case of PNJ, it
recorded a 0.618 ratio in 2020, which means 61.8% of the equity is debt and borrowings.
For SJC, the ratio stood at 0.078 and only 7.8% of the equity is debt and borrowings, which
sounded more promising to shareholders. The ratio in 2021 for PNJ was recorded at 0.766,
an all-time high, which indicated that during a struggling year, PNJ had to issue more debt
to meet its obligations to the investors. In 2022, it finally dropped to 0.579, which means
now only 57.9% of the equity is debt and borrowings, signalling positive development for
investors as the company can begin to pay back their debts. For SJC, another upward trend
was recorded as the company had a ratio of 0.126 at the end of the period, which means
12.6% of the equity is debt and borrowings.
27
c) Time interest earned ratio
The Time interest earned Ratio (TIE) measures a company’s ability to meet its debt
obligations on a periodic basis. A high TIE means that a company likely has more net
income than its interest expense, which means a lower probability of defaulting on its loans,
making it a safer investment opportunity for debt providers. Conversely, a low TIE indicates
that a company has a higher chance of defaulting, as it has less money available to dedicate
to debt repayment (Vipond, 2023). For PNJ, an upward trend is easily seen throughout the
three-year period as it started at 10.184 in 2020, which means for every $1 of interest
expense, PNJ made $10.184 of net income. Despite the impact of COVID-19 on consumers'
dwindling jewellery purchases and a disrupted retail market (PwC, 2022), PNJ still shows
strong growth in these metrics as it reached 13.975 in 2021. After two years of being
impacted, PNJ’s TIE had a record high of 26.406 in 2022, reaching an 89% growth over just
a year. Conversely, we can see a downward trend for SJC over the three-year period.
However, the ratio of this company is significantly higher than that of PNJ with a difference
of 1/65, 1/47 and 1/18 in 2020, 2021 and 2022 respectively. It is worth noting that such a
significant difference came from the low interest expense that SJC had due to fewer
payables and borrowings than PNJ.
28
d) Equity multiplier
The equity multiplier is a financial ratio that measures how much of a company's
assets are financed through stockholders' equity. The equity multiplier is also used to
indicate the level of debt financing that a firm has used to acquire assets and maintain
operations. A low equity multiplier implies a relatively small amount of debt (as the share of
assets financed by shareholders' equity is relatively high). Conversely, a high ratio suggests
a relatively high amount of debt (since the share of assets financed by shareholders' equity is
relatively low) (CFI, 2022). The equity multiplier of PNJ stayed consistent at around 1.5 and
1.8, with only a maximum difference of around 11%. The highest rate was recorded in 2021
at 1.766 but decreased to 1.579 only a year later. This most likely indicates that almost half
of the company assets are financed through equity. For SJC, their figures started at 1.078
and ended at 1.126, which indicated that only about 11% of the company assets are financed
through equity, which was significantly lower than PNJ; nevertheless, the figure of SJC was
rising over the years.
29
4. Profitability ratios
a) Profit margin
The net profit margin reflects the company's overall ability to turn revenue into
profit, after subtracting all the expenses and tax (Segal, 2023). There was a downward trend
in the profit margin over the period from 2020 to 2022. The profit margin slightly decreased
from 6.11 in 2020 to 5.26 in 2021 and then went up a little bit to 5.34 in 2022. From the
Appendix 3, net income in 2021 decreased mainly from the higher selling expenses and
administration expenses. This can imply from the fact that PNJ introduced a new selling
channel to face the pandemic cost more selling expense. Additionally, workers returned to
work after the quarantine also enlarged the cost of administration. Different from PNJ, SJC
experienced the fluctuated pattern over the period. In 2021, the profit margin increased to
0.244, meaning it can turn 0.244% of revenue into income; however, in 2022, the profit
margin fell insignificantly to 0.179%. The ratio between net income and net revenue is low
like this may be attributed to the net revenue being high, but the discrepancy between the
revenue and the cost of gold sold was too low. It led to the small net profit proportionate to
the high revenue. So from the profit margin, we can see that PNJ is doing better in
generating money from sales.
30
b) Return on assets
The ROA ratio reflects a company's ability to generate earnings from its assets and is
calculated by dividing net income by total assets. The bar graph indicates that PNJ
Corporation's ROA was higher in 2020 and decreased in 2021, from 12.61% to 9.69%. The
initial decline is possibly due to a reduction in net income due to various operational
challenges because of COVID-19 pandemic. Or there were increased investments into assets
that have not yet yielded proportionate returns. However, in 2022, there was a positive
recovery, which the ratio rose to 13.58%, suggesting either an improvement in net income or
better strategic asset management. In contrast with high figures of PNJ, the ROA ratio of
SJC has been consistently lower than that of PNJ over the past three years. This suggests
that PNJ has been more efficient at generating profits from its assets than SJC. This could be
due to a number of factors, such as PNJ's larger scale, its more established brand, or its more
efficient operations.
31
c) Return on equity
ROE measures a corporation's profitability by revealing how much profit a company

generates with the money shareholders have invested. This ratio is significant for evaluating
the financial return of shareholders. PNJ Corporation's ROE was notably high in 2020,
declined in 2021, and saw an increase in 2022. The drop in 2021 could be due to both
increased equity, and reduced profits. The rise in 2022 is on the grounds that net income was
rebound and the equity base could yield returns, which was a good sign for investors. The
rise in 2022 means that the shareholders could receive 21.44 cent on return in 2022, instead
of 17.11 cent per dollar invested like in 2021. So, for the ROE ratio, higher is better.
Compared to PNJ, ROE ratios of SJC were more constant than that of PNJ. The return on
equity ratio of SJC was 3.666 cent per dollar in 2021, which was the highest percentage it
could achieve in these 3 years. However, it was lower than any value of PNJ.
32
d) EBITDA margin
The EBITDA margin experienced the same pattern with the net profit margin. It
started at 8.98% in 2020, went down to 7.46% in 2021, and dropped unnoticeably to 7.34%
in 2022. The earnings are calculated by taking sales revenue and deducting operating
expenses, such as the cost of goods sold (COGS), selling, general, & administrative
expenses (SG&A), but excluding depreciation and amortization. The decrease in the latter 2
years primarily comes from the increase of expenses influenced by the COVID-19
pandemic. That means, PNJ corporation had to spend more to recover after the pandemic.
SJC was different, due to the main sales on gold, SJC has not achieved a high EBITDA
margin for many years. The business only profits a few each year from trading gold. As a
result, all of its profit margins (gross profit margin, EBITDA profit margin, and net profit
margin) are low.
33
5. Market value ratios
a) Price-to-earnings ratio
Price-to-earnings ratio indicates how many years it took investors to cover the initial
investment to the firm (Berger, 2023). So, the lower this ratio is, the better for the investors
to invest in the business. PNJ had the best P/E ratio in 2020 out of the 3 years since it was
the lowest P/E ratio over the period. The price-to-earnings ratio experienced the highest
value of 21.26 in 2021 throughout the period, which was caused by the significant increase
in market price per share of PNJ’s stock and also the drop in earnings per share. This
increase in stock price could be explained by the fact that many people invested in stock at
the time, and local investors controlled the stock market, causing the price to surge
throughout the year. In 2022, although the ratio dropped to 17.21 times, the market price this
year was extremely high, which was 89,900 VND, because many people trusted in investing
stock as a good deal. Although the lower, the better for P/E, high P/E ratio does not mean
bad. PNJ possesses a high P/E ratio because many investors are willing to pay a premium
for its foreseen potential. About SJC, because it is a Limited Liability Company, so SJC can
not issue stock on the market.
34
b) Market-to-book ratio
Market-to-book value witnessed a fluctuation over the period (3.51, 3.64, and 2.62
respectively). High market-to-book value means that the company is overvalued by the
market (Kenton, 2022). Market-to-book ratio is equal to market capitalization divided by
total book value of stock, so from this ratio, we can indicate that market share of PNJ was
big in general, it accounted for a large proportion in the industry. From the increase in this
ratio from 3.51 to 3.64, we can infer that PNJ may enhance its market share in 2021.
However, in 2022, its market-to-book ratio declined to 2.62 times may be attributed to it
issuing less ordinary stocks to the market since PNJ had higher retained earnings from the
previous year.
IV. Forecasting and scenario analysis

1. Forecasting
a) Forecast income statement
Assumptions for the Income Statement:
● Net Revenue
Based on the financial forecast over the period 2023-2025 that PNJ has updated
recently, we predict that net revenue will decrease by 2.4% in 2023, in 2024/2025, the net
revenue will enhance the value by 10%/9%. There are some reasons for our prediction.
Firstly, net revenue declined on downturn demand in the luxury market in Q1 2023, the
whole industry is affected, no different for domestic jewellery goods. The net revenue
decreased by 8.4% in the first 6 months of the year (PNJ, 2023). However, the net revenue
35
took a recovery in the last 4 months of 2023. In Q4 2023, which is the marriage season, the
demand for jewellery and associations increased sharply. Therefore, we estimate that net
revenue of PNJ in 2023 does not decline too much.
In 2024/2025, we estimate an increase in net revenue because of many effective

marketing campaigns; introduction of new product mix to maintain old customers and
attract new customers, as well as store expansion. PNJ is cooperating with national tv
programs such as “Sisters who make waves” on VTV3, having an official page on facebook
to communicate with customers, especially with young customers. For expanding the
targeted customers, PNJ sponsors many programs of youth to spread brand image to
university students, whose generation mostly spend on shopping.
● COGS
Based on data in 3 previous years, and also from the financial forecast made by PNJ
itself, we estimate COGS in 2023 will be equal to 80.5% of net revenue. After that, in
2024/2025, because PNJ can implement cost optimization into manufacturing, the ratio
between COGS and revenue will maintain 81% each year. However, lower percentage does
not mean that COGS will decline in 2024/2025, it refers that PNJ centres on boosting up the
sales instead of cutting off the cost. COGS will continuously increase because PNJ is
investing in machines to manufacture jewellery for a wide range of customers. After the
covid-19, workers return to work and PNJ also needs more workers if it wants to activate
store expansion in 2 big cities.
● Operating expenses
In terms of selling expense, based on the previous figures and also the forecast of
PNJ, we estimate selling expense will stay constant throughout the period from 2022-2025.
Equal to 9% of the net revenue.
With respect to G&A expenses, based on the previous figures and also the forecast of
PNJ, we estimate G&A expenses continue to equal 2% of revenue in 3 years thereafter. We
expect G&A expenses to increase in 2023F, 2024F and 2025F due to the return of workers
after the pandemic. This event will raise the salary expense.
36
Income Statement
in thousands VND 2022A 2023F 2024F 2025F
Revenue 34,211,128,942,240 33,390,061,847,626 36,729,068,032,389 40,034,684,155,304
Discounts (334,674,383,087) (326,642,197,893) (359,306,417,682) (391,643,995,274)
Net Revenue 33,876,454,559,153 33,063,419,649,733 36,369,761,614,707 39,643,040,160,030
Cost of Goods Sold

(COGS) (27,949,348,024,381) (26,878,999,787,339) (29,750,545,106,235) (32,428,094,165,796)
Gross profit 5,927,106,534,772 6,184,419,862,394 6,619,216,508,472 7,214,945,994,234
Gross profit margin 17.50 18.70 18.20 18.20
Operating Expenses
Selling expenses (2,828,208,644,376) (2,975,707,768,476) (3,273,278,545,324) (3,567,873,614,403)
General and admin

expenses (673,996,996,684) (661,268,392,995) (727,395,232,294) (792,860,803,201)
Total OpEx (3,502,205,641,060) (3,636,976,161,471) (4,000,673,777,618) (4,360,734,417,603)
Operating profit 2,424,900,893,712 2,547,443,700,924 2,618,542,730,854 2,854,211,576,631
EBITDA 2,504,417,270,683 2,626,960,077,895 2,707,702,056,992 2,933,727,953,602
Depreciation 79,516,376,971 79,516,376,971 89,159,326,138 79,516,376,971
EBIT 2,424,900,893,712 2,547,443,700,924 2,618,542,730,854 2,854,211,576,631
Financial income 54,036,974,170 87,886,807,682 89,030,452,849 111,314,251,489
Financial expense (141,471,203,463) (188,510,833,868) (104,741,709,234) (117,022,674,642)
Including: Interest Expense (94,143,431,408) (167,351,370,069) (104,597,986,667) (133,276,321,107)
Net other income (loss) (25,139,109,706) (25,139,109,706) (25,139,109,706) (25,139,109,706)
EBT 2,312,327,554,713 2,421,680,565,031 2,577,692,364,763 2,823,364,043,772
Taxes (501,635,711,316) (484,336,113,006.21) (515,538,472,952.57) (564,672,808,754.31)
Net Income 1,810,691,843,397 1,937,344,452,025 2,062,153,891,810 2,258,691,235,017
37
b) Forecast balance sheet
● Schedule
The creation of schedules to determine the Depreciation expense is an example of a
methodical process that involves a thorough investigation of the firm's fixed assets. This
thorough research made it easier to choose particular assets, and it also allowed for an
accurate evaluation of the costs and expected asset lifetimes of each asset. This meticulous
procedure emphasizes the dedication to precisely measure and distribute Depreciation costs,
improving the overall precision and dependability of financial reporting. The needed fixed
assets consist of Buildings and Structures, Machinery and Equipment, Motor Vehicles,
Office Equipment, Software, and other long-term assets. In fact, acquiring complex,
expensive, and specialized machinery is standard procedure when trying to increase market
share in the jewellery sector. The use of such advanced machinery is necessary to guarantee
effective manufacturing processes and operation given the complexity of these sectors. As a
result, purchasing these fixed assets is a crucial investment strategy for PNJ, as it greatly
enhances their productivity and operational effectiveness.
Fixed Assets Historical

Asset Life
in thousands VND (Years) 2022A 2023F 2024F 2025F
CapEx
Buildings and Structures 20 VND 336,742,733
Machinery and
Equipment 10 VND 35,317,392,295
Motor Vehicles 7 VND 3,056,584,672
Office Equipment 3 VND 4,302,741,416 VND 41,709,088,458
Software 3 VND 5,340,207,751 VND 52,157,746,818
Other Long-term assets VND 4,030,932,699
Total CapEx VND 52,384,601,566 VND - VND - VND 93,866,835,276
Depreciation
Buildings and structures 8,515,689,367 8,515,689,367 8,515,689,367 8,515,689,367
Machinery and
Equipment 33,949,065,777 33,949,065,777 33,949,065,777 33,949,065,777
Motor Vehicles 5,762,676,735 5,762,676,735 5,762,676,735 5,762,676,735
Office Equipment 13,903,029,486 13,903,029,486 18,205,770,902 13,903,029,486
Software 17,385,915,606 17,385,915,606 22,726,123,357 17,385,915,606
VND VND
Total D&A VND 79,516,376,971 79,516,376,971 89,159,326,138 VND 79,516,376,971
38
● Forecasting Balance Sheet
PNJ's Forecasting of Balance Sheet shows a projection of a company's assets,
liabilities, and equity over the period ranging from 2023 to 2025. The table shows the sum
of current assets, non-current assets, current liabilities, non-current liabilities and equity
analyzed using historical data in the firm’s financial statement to identify patterns and
trends. The current asset is projected to experience a sustainable upward trend with the
number starting at around 15 trillions to 19.5 trillions. The total non-current assets are
expected to go through the same pattern with that of total current assets, projecting at 16,3
trillions in 2023 19 trillions in 2024 and 21 trillions. Total current liabilities are expected to
decrease between 2022 and 2023 as the company has reduced its short-term obligations
during the period of economic depression. After that, they are projected to increase slightly
approximated 1 trillion each year with the number from 3,5 trillions in 2023, to 4,8 trillions
in 2024 and 5,2 trillions in 2025. The total long-term liabilities and total equity are both
expected to undergo an upward pattern. For equity, PNJ can enjoy a strong inflow thanks to
the recovery in the Vietnam stock market. Overall, the balance sheet is projected to grow
each year over the duration between 2023 and 2025, with the highest projected at around 21
trillions in 2025F. This statement indicates that PNJ will be capable of maintaining a healthy
cash flow to support future growth, after the postafter effect of COVID-19 and economic
downturn.
Historical
Balance Sheet
2022A 2023F 2024F 2025F
Current Assets
Cash 879,548,130,711 1,789,532,399,164 3,793,845,532,473 4,887,552,022,701
Short-term investments 200,000,000,000 380,000,000,000 163,400,000,000 392,160,000,000
Short-term receivables 300,880,402,245 171,501,829,280 245,247,615,870 350,704,090,694
Inventory 10,506,054,932,284 11,556,660,425,512 12,596,759,863,809 13,100,630,258,361
Other current assets 79,874,296,558 95,849,155,870 119,811,444,837 149,764,306,046
Total current assets 11,966,357,761,798 13,993,543,809,826 16,919,064,456,988 18,880,810,677,802
39
Non-current assets
Long-term receivables 93,956,493,011 56,373,895,807 80,614,671,003 115,278,979,535
Fixed assets 882,432,821,075 900,081,477,497 942,925,355,825 990,731,671,366
Long-term asset in
progress 30,826,629,189 29,809,350,426 28,915,069,913 28,047,617,816
Other long-term assets 363,550,944,173 338,102,378,081 361,769,544,547 419,652,671,674
Total non-current assets 1,370,766,887,448 1,324,367,101,810 1,414,224,641,288 1,553,710,940,390
Total assets 13,337,124,649,246 15,317,910,911,636 18,333,289,098,276 20,434,521,618,192
Current Liabilities
Short-term trade accounts

payable 277,212,839,495 242,173,136,583 269,199,658,625 290,197,231,998
Short-term borrowings 2,683,045,875,772 1,690,318,901,736 2,683,550,288,397 3,078,032,180,791
Other short-term liabilities 1,922,805,706,129 1,615,156,793,148 1,854,199,998,534 1,928,367,998,476
Total Current Liabilities 4,883,064,421,396 3,547,648,831,468 4,806,949,945,556 5,296,597,411,265
Long-term liabilities
Other long-term payables 218,668,000 212,107,960 205,744,721 199,572,380
Provision for long-term

liability 9,746,905,000 10,039,312,150 10,340,491,515 10,650,706,260
Total Long-term
liabilities 9,965,573,000 10,251,420,110 10,546,236,236 10,850,278,639
Total Liabilities 4,893,029,994,396 3,557,900,251,578 4,817,496,181,792 5,307,447,689,904
Owners' equity
Owners' capital 2,461,716,200,000 3,323,316,870,000 3,655,648,557,000 3,334,698,645,864
Share premium 2,251,376,032,458 2,251,376,032,458 2,251,376,032,458 2,251,376,032,458
Treasury shares (3,384,090,000) (3,434,851,350) (3,469,199,864) (3,510,483,342)
Investment and
development fund 1,212,120,556,918 3,515,150,696,148 3,595,150,652,904 3,823,374,607,377
40
Undistributed earnings 2,522,265,955,474 2,673,601,912,802 4,017,086,873,986 5,721,135,125,930
Total Equity 8,444,094,654,850 11,760,010,660,058 13,515,792,916,484 15,127,073,928,288
Total Liabilities &

Equity 13,337,124,649,246 15,317,910,911,636 18,333,289,098,276 20,434,521,618,192
c) Forecast statement of cash flow

PNJ's Statement of Cash flow provides a detailed overview of the company's
financial activities over the next few years. The table shows the pretax profit, operating
activities, investing activities, and financing activities of the company for the years 2022,
2023F, 2024F, and 2025F. The pretax profit is projected to increase each year, with the
highest projected at 2,823,364,043,772 VND in 2025F. The operating cash flow is also
expected to increase 30x in 2023F due to sudden rise in working capital, then decrease to
1,273,568,931,704 and 1,870,605,036,068 in 2024F and 2025F. Investing cash flow is
expected to fluctuate, with a significant increase in 2024F due to higher net investments.
The financing cash flow is expected to decrease in 2023F due to debt repayment, but
increase in 2024F and 2025F due to net borrowings. Overall, the net cash flow is projected
to increase each year, with the highest projected at 170,250,854 USD in 2025F. This
statement indicates that PNJ has a strong cash position and is investing in the business to
support future growth, after a period of impact from COVID-19 and economic downturn
afterwards.
Statement of Cash
Flows
2022 2023F 2024F 2025F
Beginning Cash
Balance 355,454,838,957 879,548,130,711 1,789,532,399,164 3,793,845,532,473
Pretax Profit 2,312,327,554,713 2,421,680,565,031 2,577,692,364,763 2,823,364,043,772
Operating Activities
Depreciation &
Amortization 79,516,376,971 79,516,376,971 89,159,326,138 79,516,376,971
Tax paid (464,338,080,937) (484,336,113,006) (515,538,472,953) (564,672,808,754)
Other adjustments 67,721,768,779 91,424,387,852 145,364,776,684 248,573,768,130
Changes in Working
Capital (1,894,646,412,830) 1,420,984,809,623 (1,023,109,062,928) (716,176,344,050)
41
Operating Cash Flow 100,581,206,696 3,529,270,026,470 1,273,568,931,704 1,870,605,036,068
Investing Activities
Net Investments (318,282,677,060) (521,983,590,378) 260,991,795,189 (574,181,949,416)
Net CapEx (52,384,601,566) 93,866,835,276
Investing Cash Flow (370,667,278,626) (521,983,590,378) 260,991,795,189 (480,315,114,140)
Financing Activities
Dividends Paid (616,671,158,340) (655,521,441,315) (835,789,837,677) (877,579,329,561)
Changes in Share
Capital 1,447,231,530,000 66,138,480,921 0 49,603,860,691
Changes in Short-term
Debt (38,884,825,372) (1,011,005,459,672) 980,675,295,882 392,270,118,353
Changes in Long-term
Debt 0 0 0 0
Other financing cash
flow 0 (496,913,747,572) 324,866,948,211 139,121,918,818
Financing Cash Flow 791,675,546,288 (2,097,302,167,639) 469,752,406,415 (296,583,431,700)
Net Cash Flow 521,589,474,358 909,984,268,453 2,004,313,133,309 1,093,706,490,228
Ending Cash Balance 879,548,130,711 1,789,532,399,164 3,793,845,532,473 4,887,552,022,701
2. Scenario Analysis
in billions VND 2023F 2024F 2025F
Revenues 33,063,419,649,733 36,369,761,614,707 39,643,040,160,030
COGS (26,878,999,787,339) (29,750,545,106,235) (32,428,094,165,796)
Profit (Loss) 6,184,419,862,394 6,619,216,508,472 7,214,945,994,234
Choose scenario => 2
Revenue Scenarios
1. Best case (+20%) 39,676,103,579,680 43,643,713,937,648 47,571,648,192,036
2. Base case 33,063,419,649,733 36,369,761,614,707 39,643,040,160,030
3. Worst case (-20%) 26,450,735,719,787 29,095,809,291,765 31,714,432,128,024
Cost Scenarios
1. Best case (-10%) 24,191,099,808,605 26,775,490,595,612 29,185,284,749,217
2. Base case 26,878,999,787,339 29,750,545,106,235 32,428,094,165,796
3. Worst case (+10%) 29,566,899,766,073 32,725,599,616,859 35,670,903,582,376
42
a) Best case scenario
The best case scenario of PNJ is that their revenue increases 20% and their cost of
goods sold increases 10%. These changes could be attributed to the fact that there will be a
shift in the product mix with a greater emphasis on retail jewellery and a lower promotion
price strategy following a successful promotional period so as to capture the market share.
With a statistical jewellery market share of more than 55% and a robust mid-to high-end
clientele that is less impacted by inflation, PNJ is leading the industry. In addition, in the
long run, it is anticipated that PNJ's initiatives to create more appealing concepts, launch
more successful advertising campaigns, collaborate with international brands to create
"Multi Branded Stores," and boost digitization will help PNJ's net profit to continue growing
by double digits. Last but not least, as the Vietnamese stock market recovers, PNJ's shares
may see significant inflows.
b) Worst case scenario

The worst scenario for PNJ is that their revenue decreases 20% and COGS increases
10%, the scenario would most likely result from the impact of lower consumption with the
decrease in retail sales and wholesales of 22.6%/43.4% YoY over the period. This can be
attributed to retail sales and wholesales plunged due to weak demand for domestic jewellery
in the context of high inflation and consumers’ low expense allocations for luxury goods in
general. We believe domestic jewellery demand will continue to weaken and PNJ may keep
recording negative profit growth in 3Q23F following the lower in consumption and this is
not a hot season for jewellery. That said, we believe economic headwinds - including higher
interest rates YoY coupled with weakness in the equity market and property market - will
eventually dampen consumer confidence even among the middle-affluent class. We assume
more vibrant discretionary spending in 2024.
V. Conclusion
1. Strengths
Firstly, PNJ’'s inventory turnover ratio showed a significant upward trend in the
latter part of the period, showing an increase in inventory control and efficiency. This may
indicate that the business has been attempting to improve the efficiency of its inventory
management procedures, which could result in cost savings and increased profitability.
Second, the firm’s high receivables turnover rate also explained that PNJ has been efficient
43
in collecting account receivables and maintaining a healthy cash flow. In terms of the TIE,
PNJ attempted to deliver a consistently increasing time interest earned ratio over the 3-year
period, making it a safer investment opportunity for debt providers. Despite the initial
decline of the ROA ratio, there was a positive recovery in this ratio at the end of 2022,
suggesting either an improvement in net income or better strategic asset management of the
company.
2. Weaknesses
First, the decrease in EBITDA margin in the latter 2 years primarily comes from the
increase in expenses influenced by the COVID-19 pandemic, which means PNJ corporation
had to spend more to recover after the pandemic. Furthermore, the fluctuating profit margin
showed that PNJ company had to put more effort into turning revenue into profit
sustainability in the future. Apart from that, the significant reduction in non-current assets
for PNJ during the time frame suggests that PNJ may be less sustainable in the long term.
44
ASSIGNMENT 2: EQUITY VALUATION
I. Free cash flow to equity
Free cash flow to equity (FCFE) is the amount of cash a business generates that is
available to be potentially distributed to shareholders. In essence, it is a cash flow that can
be withdrawn from the enterprise and transferred to the owner without the enterprise being
adversely affected in any way. FCF, or free cash flow, is the cash flow generated by the
basic operations of a business after deducting investments in new capital. CFE, or cash flow
to equity, is understood as a cash flow that is withdrawn from the company and passed on to
the owner (shareholder) (Vochozka et al., 2020).
Our team intends to use the recommended formula from the lecturer (Figure) which
goes as follows:
The Net income from the Income Statement is added with Depreciation &
Amortisation. This is because Depreciation & Amortisation is a non-cash expense used to
allocate the cost of assets over their useful life, so they must be added back to the cash flow.
45
The next step would be to net out capital expenditures & acquisitions, and for the case of
PNJ, since there are no acquisitions during the year so only the capital expenditures are
accounted for. Next step would be net out working capital needs, which is the Change in
non-cash Working Capital. This account represents the sum of inventory and receivables,
and also the difference between the non-cash current assets and current liabilities, which
means it can be calculated in two ways (for the case of PNJ, the first formula is utilised):
The last step would be to account for the changes in a company's debt over the
financial year, as the debt structure of the company can reflect the potential cash flow the
company can provide for the stakeholders. Normally, this amount would be calculated by
the difference between the debt issued and debt repayments during the year; however, as
PNJ provided the changes in short-term debts and long-term debts in their financial
statements, the changes in PNJ’s debt would be the sum of these two accounts.
After adjustments to accommodate with the data gathered from the company’s
financial statements, the research team decided to calculate the FCFE based on the
following formula:
From the given formula, we were able to calculate the FCFE of 2022A, 2023F,
2024F and 2025F, as presented in the table below:
FCFE
billion VND 2022 2023F 2024F 2025F
Net Income (From IS) 1,811 1,937 2,063 2,259
Depreciation & Amortisation (From BS) 80 80 89 80
Change in Total Current Assets exclude Cash
(From BS) (2,150) (1,117) (921) (868)
46
Change in Total Current Liabilities (From BS) 320 1,335 1,259 490
Operating Cash Flow 61 2,235 2,490 1,961
Net CapEx (From CF) (52) 0 0 (94)
Investing Cash Flow (52) 0 0 (94)
Net Change in Debt (Changes in Short-term +
Long-term Debts) (From CF) (39) (1,011) (981) (392)
Financing Cash Flow (39) (1,011) (981) (392)
Net Cash Flow (30) 1,224 1,509 1,475
Free Cash Flow to Equity (30) 1,224 1,509 1,475
From this table, we can conclude that PNJ’s FCFE for 2022A, 2023F, 2024F and
2025F is -30 billion, 1224 billion, 1509 billion and 1475 billion VND, respectively. The
negative FCFE in 2022A signalled a significant change that affected the company’s cash
flow, in this case it is the current assets exclude cash, a sharp decrease of 2150 billion means
the company invested money in its current assets, therefore the remaining cash flow for
stakeholders was negative. For the three years in the future, we expect that this investment
will gradually shrink, which results in a positive FCFE.
II. Cost of equity

In the domain of corporate finance, assessing the value of a company's equity shares
is crucial, and equity valuation serves as a key determinant. When focusing primarily on
equity valuation, the Capital Asset Pricing Model (CAPM) is the preferred method for
calculating the cost of equity. This approach is especially suitable for evaluating the appeal
of investing in a company's equity, considering factors such as the risk-free rate, equity beta,
and expected market return. Conversely, when analyzing projects or investments that impact
the entire firm, the Weighted Average Cost of Capital (WACC) is a more appropriate tool.
WACC considers both equity and debt costs, making it suitable for a broader evaluation.
Overall, CAPM is widely employed in determining the cost of equity, an essential element
in the equity valuation process (see the formula below).
47
Where:
It is noted that all data and rates must be in the same period. Now let's break down
the CAPM equation step by step.
1. Risk-free rate
We have chosen the 10-year government bond yield as the risk-free rate in financial
calculations in the context of Vietnam because government bonds are considered relatively
low-risk. While there is a chance that some governments could experience default risk, and
the rates on bonds they issue will not be risk-free, the likelihood of this happening is
extremely low (Corporate Finance Institute, 2020). Comparing government bonds to other
investments, it is common to believe that they are more stable and liquid. Since
governments are thought to have a very low default risk, the yield on government bonds
represents the perceived risk-free rate. Because it strikes a balance between short-term
volatility and long-term stability, the 10-year maturity is frequently selected.
The risk-free rate of 2.353% is chosen to be used for CAPM model calculations and
other financial analyses based on the information gained from research.
48
2. Market return
The market return is an important performance metric and investment attractiveness
measure. It is frequently benchmarked against an index, such as the VN-Index in the case of
stocks traded on the Ho Chi Minh Stock Exchange (HOSE). In this case, we calculate the
daily average percentage change in VNindex. Then we used the formula below and
calculated the average annual return, which is defined as market return at the end.
Market return captures the general upswing or downswing of the stock market and
the economic variables that affect investor behavior. A quantitative picture of the investment
climate is given by the market return of 13.31% from 2023 up to 2nd January 2024.
3. Beta
Beta coefficient (β) is the best measure of systematic risk of an individual security or
a diversified portfolio. It measures how sensitive a security or portfolio is to movements in
the overall market. In the CAPM model, beta is used to calculate the expected return of an
asset based on its systematic risk and the return on the market. The beta calculation in excel
is a form analysis since it shows the slope of the security's characteristic line, which is a
straight line that shows the correlation between a stock's rate of return and the return from
the market. Based on this knowledge, we calculate beta by Excel following 4 steps:
Step 1: Collect historical data of Vietnamese stock market price and PNJ’s stock
price in 2023. The daily stock prices of PNJ and VNIndex downloaded from Investing.com
were used to compile these historical statistics. The price data was collected from January
3rd, 2023 to January 1st, 2024. Closing price is the price we took to calculate the return rate.
Step 2: Calculate the daily return of firm stock and the daily return of market
portfolio by computing the percentage change of VNIndex stock price and PNJ stock price
per day. The daily return rate is calculated by taking the next day price minus the previous
day price, then divided by the previous day price.
49
Step 3: Use the SLOPE function in Excel to calculate Beta, with “known_ys” is the
PNJ stock’s return rate, and “known_xs” is the market return.
Beta is positive means that PNJ stock price reacts to the movements of the overall
market in the same direction. If the market price increases by 1% , then PNJ stock price
increases 0.55%, and it is the same with the dropdown scenario. Beta of 0.55, which is
lower than 1, expects that PNJ stock price is less volatile than the broader market.
4. Cost of equity
Now that we have gathered all the required information, we proceed to determine the
cost of equity using the formula below:
With:
50
Input all the gathered data:
After performing the calculations, it is determined that PNJ currently has a cost of
equity at approximately 8.38%. This figure signifies the return demanded by investors for
holding PNJ's stock, taking into account the associated risk level. The 8.38% cost of equity
suggests potentially higher returns, but it is also indicative of the elevated risk linked to
investing in a company with a higher beta of 0.55. The beta implies that PNJ's stock is more
prone to volatility compared to the general market, potentially resulting in larger price
fluctuations in response to market movements.
Additionally, the cost of equity is influenced by external factors like the risk-free rate
(2.35%) and the market return (13.31%). Changes in these rates can affect the perceived
attractiveness of PNJ's stock in terms of potential returns relative to risk.
III. Terminal value

1. Growth rate
The first step to calculate terminal value is to find the growth rate. In this part, we
will calculate the growth rate of earnings per share (EPS) of PNJ throughout the period from
2018 to 2023. The EPS growth rate is an important indicator of a company's financial
success and profitability.
The EPS growth rate is calculated using the formula:
The expected growth rate for the future EPS is calculated by calculating the average
value of the EPS Growth Rate over the 2018-2023 period.
51
The growth rate of 2020 and 2021 were negative due to the effect of COVID-19
pandemic. Especially, EPS in 2020 fell sharply and remarkably compared to 2019. This
decrease in earnings mainly came from the store cut-off and restructure of organisation
(TheLEADER.VN, 2020). In 2020, since the demand for jewellery of customers decreased,
many stores of PNJ had to be closed due to the fall in revenue. Moreover, in the same year,
in order to deal with the difficulty caused by COVID 19, PNJ paid a large cost and
expenses to restructure its products basket, cut off and reorganise the front office as well as
encourage digital transformation. In 2021, thanks to the suitable targeted customers and
product mix, PNJ started to recover from the pandemic. By 2022, influenced by the
recovery of the whole retail industry (H2O Investment, 2022), PNJ experienced a
significant growth in EPS.
2. Terminal value
The terminal value represents the value of a company's future cash flows beyond the
forecasted period. One approach commonly used to compute the terminal value is the
perpetuity growth model, which assumes that the company's cash flows would grow at a
constant rate continuously.
The formula used:
Where:
𝐶𝐹𝑛+1: is the actual final year cash flow
𝑔: is the growth rate after the final year

𝑟: is the discount rate or cost of equity
52
𝐶𝐹2026 𝐶𝐹2025*(1+𝑔) 1,475*(1+3.72%)
⇨ 𝑇𝑉2025= 𝑟−𝑔
= 𝑟−𝑔
= 8.38%−3.72%
= 32,863.89 (billions VND)
Given the difficulties of projecting cash flows far into the future, this approach
allows us to capture the company's long-term worth while taking practical issues into
account.While the premise of infinite life may be reasonable in some instances, it is critical
to be cautious and realistic. Businesses are subject to changing market dynamics, technology
advancements, and other unknowns. As a result, while the perpetuity growth model
accommodates unlimited growth, it should be used with caution, taking into account both
the company's historical success and its future prospects.
IV. Equity valuation

Discounted Cash Flow (DCF) is a technique for valuing investments that determines
their worth based on anticipated future cash flows which looks at an investment's current
value in relation to future cash flow estimates (Jason F., 2023). It can be beneficial to any
individual contemplating whether to purchase stocks or an acquisition. Decisions on capital
budgeting and operating expenses can also be made with the help of discounted cash flow
analysis for managers and owners of businesses (Hiral V., 2023). With a view to analyze the
equity valuation, our team followed the Discounted Cash Flow approach.
In the final step of a DCF valuation, the results of all the earlier stages are gathered
together. Under the estimation of future cash flows, we found out that the PNJ’s Free Cash
Flow to Equity (FCFE) from 2023 to 2025 is projected at 1224 billion, 1509 billion and
1475 billion VND, respectively. We assume the terminal value for 2025 which is 32,863.89
billion VND since we are expecting that the growth rate stays constant at g = 3.72% starting
in that year. As in 2025, the terminal value and cash flow are made up of two parts. As a
result, they will be discounted using the 8.38% discount rate to the present value.
53
Based on the above date, PNJ has 327,999,629 outstanding shares, the original price
per share was established at 89,597 VND; however, as of January 3rd, 2024, the real stock
price is 86,000 VND. Therefore, it is reasonable to conclude that PNJ’s stock is
undervalued.
in billions VND
Terminal Value in year 2025 32,863.89

Equity Valuation 29,387.62
Shares Outstandings 327,999,629
in VND
Price per share (valuation) 89,597
Price per share (actual) 86,000
A reduced stock price may be the consequence of both objective and speculative
variables working together. With respect to subjective viewpoint, we believe that the stock's
undervalued position is a result of the current market situation. A lack of confidence among
investors can result from recent bad news, external economic instability, or geopolitical
developments. This can drive the share price below its true worth. In addition, there can be a
discrepancy between the stock's true potential and the current market price since
company-specific news and developments that could have a significant impact on its value
have not been properly factored in. Furthermore, there are numerous ways to compute, so
various approaches to intrinsic valuation may result in different outcomes.
Primary investigation reveals significant underlying issues at the objective level. The
company's solid cash flow production, consistent revenue sources, and significant earnings
growth point to a greater intrinsic value, even though the initial valuation was set at 89,597
VND per share. Strong short-term market forces can be the reason for the market's inability
54
to completely realize this promising start. Its undervaluation is further supported by
comparison analysis with industry peers; comparable companies with comparable
economies that command inflation indicate that this specific company may still be valued
below its true value.
Professional investors' decisions can also be influenced by equity prices. When the
stock market is cheap, they can provide a number of possibilities, such maintaining the
investment until the market settles and inflation occurs, requiring patience, or taking
advantage of the current price discount to stay inexpensive. Additionally, there is still a
chance to earn by selling the stock for more than the original cost, even if it doesn't surpass
par value. Nevertheless, there are issues with purchasing cheap because there's a chance that
the price can drop again. Therefore, before purchasing discounted assets, investors should
carefully assess if the gains outweigh these potential drawbacks.
V. Conclusion
To sum up everything that has been stated so far, PNJ's equity valuation using the
Discounted Cash Flow (DCF) and Free Cash Flow to Equity (FCFE) methods provides
crucial insights into the company's financial outlook. The Free Cash Flow to Equity (FCFE)
projections for 2023 to 2025 are 1,224 billion, 1,509 billion, and 1,475 billion VND,
respectively. Notably, the negative FCFE in 2022 signifies a significant change in the
company's cash flow, primarily attributed to substantial investments in current assets,
leading to a negative impact on stakeholders' remaining cash flow.
The Cost of Equity, determined through the Capital Asset Pricing Model (CAPM), is
approximately 8.38%. This figure reflects the return demanded by investors for holding
PNJ's stock, considering the associated risk level, with a beta of 0.55 indicating higher
volatility compared to the general market. The Terminal Value, calculated using the
perpetuity growth model, is estimated at 32,863.89 billion VND for 2025. This value
captures the company's potential long-term worth, accounting for projected cash flows
beyond the forecasted period.
In terms of financial metrics, investors must carefully weigh the benefits and risks
before making investment decisions. While the FCFE projections suggest positive trends in
55
the coming years, the company's negative FCFE in 2022 emphasizes the importance of
considering short-term fluctuations. The cost of equity at 8.38% implies potential higher
returns but also indicates the elevated risk associated with investing in a company with a
beta of 0.55.
Finally, investors can choose strategies such as holding undervalued securities for
potential future gains, selling undervalued stocks to capitalize on market conditions, buying
more stock at lower prices, or selling at a profit even if the stock price doesn't increase
significantly. These strategies provide diverse perspectives for navigating passive markets,
allowing investors to optimize their approach based on risk tolerance and financial goals.
56
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APPENDIX
Appendix 1 - Consolidated Balance Sheet of PNJ in 2020, 2021 and 2022
PHU NHUAN JEWELRY JOINT STOCK COMPANY

CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER
As at 31 December
Code ASSETS 2020 2021 2022
100 CURRENT ASSETS 7,143,929,036,497 9,292,192,238,421 11,966,357,761,798
110 Cash 422,234,781,061 355,454,838,957 879,548,130,711
111 Cash 422,234,781,061 355,454,838,957 879,548,130,711
120 Short-term investments - - 200,000,000,000
123 Investments held to maturity - - 200,000,000,000
130 Short-term receivables 98,997,286,429 111,969,758,488 300,880,402,245

131 receivable 67,591,685,619 59,930,655,833 56,532,707,659
Short-term prepayments to
132 suppliers 20,218,946,599 30,659,175,548 68,902,837,213
135 Short-term lending - - 140,000,000,000
136 Other short-term receivables 12,216,206,010 22,831,538,994 37,641,170,145
Provision for doubtful

137 debts-short-term (1,202,878,846) (2,004,798,077) (2,862,909,308)
Shortage of assets awaiting

139 resolution 128,327,047 553,186,190 666,596,536
140 Inventory 6,545,905,987,056 8,754,741,712,359 10,506,054,932,284
61
141 Inventories 6545905987056 8,754,741,712,359 10,508,065,026,916
Provision for decline in

149 value of inventories - - (2,010,094,632)
150 Other current assets 76,790,981,951 70,025,928,617 79,874,296,558
151 Short-term prepaid expenses 66,112,866,470 56,716,921,380 74,007,356,286
Value Added Tax ("VAT") to

152 be reclaimed 10,670,276,957 8,705,831,517 5,866,940,272
Tax and other receivables

153 from the State 7,838,524 4,603,175,720 -
200 NON-CURRENT ASSETS 1,339,217,061,954 1,326,824,308,701 1,370,766,887,448
210 Long-term receivable 77,310,617,360 84,131,506,164 93,956,493,011
216 Other long-term receivables 77,310,617,360 84,131,508,164 93,956,493,011
220 Fixed assets 931,617,117,533 909,985,491,983 882,432,821,075
221 Tangible fixed assets 281,244,232,172 259,137,188,160 239,734,551,747
222 Historical cost 600,464,186,725 633,614,629,426 672,781,337,441
223 Accumulated depreciation (319,219,954,553) (374,477,441,266) (433,046,785,694)
227 Intangible fixed assets 650,372,885,361 650,848,303,823 642,698,269,328
228 Historical cost 683,791,142,309 697,774,918,988 707,010,800,099
229 Accumulated amortisation (33,418,256,948) (46,926,615,165) (64,312,530,771)
Long-term asset in
240 progress 33,003,867,003 30,795,369,850 30,826,629,189
242 Construction in progress 33,003,867,003 30,795,369,850 30,826,629,189
250 Long-term investments - - -
253 Investments in other entities 395,271,613,400 395,271,613,400 395,271,613,400
62
254 investments (395,271,613,400) (395,271,613,400) (395,271,613,400)
260 Other long-term assets 297,285,460,058 301,911,940,704 363,550,944,173
261 Long-term prepaid expenses 206,301,766,031 201,443,147,089 243,656,590,750
262 Deffered income tax assets 90,983,694,027 100,468,793,615 119,894,353,423
270 TOTAL ASSETS 8,483,146,098,451 10,619,016,547,122.00 13,337,124,649,246
300 LIABILITIES 3,241,284,233,443 4,606,382,566,869 4,893,029,994,396
310 Short-term liabilities 3,231,907,356,443 4,563,002,409,508 4,883,064,421,396

311 payable 481,588,464,720 680,447,298,103 277,212,839,495
Short-term advances from

312 customers 157,182,968,364 156,729,112, 135 222,164,283,405
Tax and other payables to

313 the State 214,710,310,923 309,500,571,902 292,985,361,927
314 Payable to employees 290,765,645,610 385,144,216,152 889,709,809,124
315 Short-term accrued expenses 55,520,256,916 69,534,599,697 98,530,177,216
319 Other short-term payable 76,978,636,900 83,404,423,727 227,169,093,119
320 Short-term borrowings 1,839,275,064,065 2,721,930,701,144 2,683,045,875,772
Provision for short-term

321 critics - 30,129,306,488 30,129,306,488
322 Bonus and welfare fund 115,886,008,945 126,182,180,160 162,117,674,850
330 Long-term liabilities 9,376,877,000 43,380,157,361 9,965,573,000
337 Other long-term payables 526,168,000 518,668,000 218,668,000
63
342 liability 8,850,709,000 42,816,489,361 9,746,905,000
400 OWNERS' EQUITY 5,241,861,865,008 6,012,633,980,253 8,444,094,654,850
410 Capital and reserves 5,241,861,865,008 6,012,633,980,253 8,444,094,654,850
411 Owners' capital 2,276,123,620,000 2,276,123,620,000 2,461,716,200,000
- Ordinary shares with

411a voting rights 2,276,123,620,000 2,276,123,620,000 2,461,716,200,000
412 Share premium 991,261,882,458 991,261,882,458 2,251,376,032,458
415 Treasury shares (3,384,090,000) (4,908,890,000) (3,384,090,000)
Investment and development

418 fund 372,779,556,918 800,503,556,918 1,212,120,556,918
421 Undistributed earnings 1,605,080,895,632 1,949,553,810,877 2,522,265,955,474
- Undistributed cost-tax
421a profits of previous year 670,845,205,971 920,611,645,232 859,175,348,677
- Post-tax profits of current

421b year 934,235,689,661 1,029,042, 165,645 1,663,090,606,797
440 TOTAL RESOURCES 8,483,146,098,451 10,619,016,547,122 13,337,124,649,246
Appendix 2 - Common-size Analysis Income Statement
ITEM 2020 2021 2022 Change in Change in

2020 & 2021 2021 & 2022
Revenue from sales of goods and 100.00% 100.00% 100.00%

rendering of services
Less deductions -0.97% -0.96% -0.98% 0.01% -0.02%
Net revenue from sales of goods and 99.03% 99.04% 99.02% 0.01% -0.02%
rendering of services
Cost of goods sold and services -79.61% -80.81% -81.70% -1.20% -0.88%
64
rendered
Gross profit 19.43% 18.23% 17.33% -1.19% -0.91%
0.00%
Plus: Financial income 0.13% 0.08% 0.16% -0.04% 0.08%
Financial expense -0.91% -0.60% -0.41% 0.31% 0.19%
Interest expenses -0.87% -0.53% -0.28% 0.34% 0.25%
Selling expenses -8.04% -8.55% -8.27% -0.52% 0.28%
General and admistration expenses -2.86% -2.54% -1.97% 0.32% 0.57%
Net operating profit 7.63% 6.62% 6.83% -1.01% 0.21%
Other income 0.03% 0.04% 0.03% 0.01% -0.02%
Other expenses -0.05% -0.19% -0.10% -0.14% 0.09%
Net other (expenses)/income -0.02% -0.14% -0.07% -0.12% 0.07%
Net income 7.61% 6.48% 6.76% -1.13% 0.28%
Business income tax - current -1.58% -1.32% -1.52% 0.26% -0.21%
Business income tax - deferred 0.02% 0.05% 0.06% 0.03% 0.01%
0.00% 0.00%
Net profit after tax 6.05% 5.21% 5.29% -0.83% 0.08%
Attributable to:Owners of the parent 6.05% 5.21% 5.29% -0.83% 0.08%

company
Basic EPS 0.00% 0.00% 0.00% 0.00% 0.00%
Diluted EPS 0.00% 0.00% 0.00% 0.00% 0.00%
Appendix 3 - Consolidated Income Statement of PNJ
65
Appendix 4 - Consolidated Cash Flow Statement of PNJ
N/A: Insufficient data HISTORICAL
in VND 2020 2021 2022
PNJ JSC.
Cash Flow Statements
Net Accounting Profit Before Tax 1,345,980,468,715 1,279,230,522,031 2,312,327,554,713
66
Plus: Depreciation and Amortization 72,154,867,041 75,118,429,219 79,516,376,971
Plus: Provisions 6,391,807,846 64,942,006,080 2,868,205,863
Unrealised foreign exchange losses/(gains) 177,425,063 2,504,365,377 (8,239,903,282)
Losses/(Profits) from investing activities 1,237,319,162 (3,225,478,644) (21,327,686,776)
Plus: Interest expense 154,416,694,276 104,380,274,160 94,421,152,974
Changes in working capital
Change in Accounts Receivable 17,322,807,863 (23,111,709,097) (52,151,674,870)
Inventory 484,514,384,160 (2,208,835,725,303) (1,753,323,314,55)
Change in Accounts Payable (99,651,505,808) 354,804,359,041 76,506,711,125
Change in Prepaid Expenses (42,462,273,125) 14,254,564,032 (59,503,878,567)
Interest paid (155,543,069,575) (105,200,568,547) (90,657,750,651)
Tax paid (253,134,374,354) (234,058,441,077) (464,338,080,937)
Other changes (34,492,822,139) (43,169,828,785) (15,516,505,310)
Operating Cash Flow 1,496,911,729,125 (722,367,231,513) 100,581,206,696
Purchases of fixed assets and other

long-term assets (85,433,646,180) (61,304,197,645) (52,384,601,566)
Proceeds from disposals of fixed assets 792,669,960 12,869,426,085 1,498,185,785
Loans granted and term deposits placed at

banks N/A N/A (540,000,000,000)
Collection of loans and term deposits placed

at banks N/A N/A 200,000,000,000
Interest received 251,771,651 267,480,935 20,219,137,155
Investing Cash Flow (84,389,204,569) (48,167,290,625) (370,667,278,626)
Proceeds from issuance of shares 46,375,540,000 N/A 1,447,231,530,000
Payments for share repurchases (1,283,000,000) (1,524,800,000) N/A
Proceeds from borrowings 7,432,783,338,336 7,758,858,344,889 6,261,254,967,206
Repayments of borrowings (8,208,110,896,493) (6,876,202,707,810) (6,300,139,792,578)
67
Dividends paid (355,099,739,283) (177,376,257,045) (616,671,158,340)
Financing Cash Flow (1,085,334,757,440) 703,754,580,034 791,675,546,288
Net Cash Flow 327,187,767,116 (66,779,942,104) 521,589,474,358
68

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GROUP ASSIGNMENT COVER SHEET

Student name: Lê Nhã Nhật Hân Student ID number: 31221024468

Student name: Nguyễn Quỳnh Mai Student ID number: 31221023331

Student name: Nguyễn Chu Nguyệt Minh Student ID number: 31221026796

Student name: Trần Nhật Quang Student ID number: 31221026606

Student name: Lê Quỳnh Thy Student ID number: 31221022577

Unit name: Corporate Finance Unit number: CF-DH48ISB-09

Title: Final Report

I hold a copy of this assignment if the original is lost or damaged.

Student’s signature: Han

Student’s signature: Mai

Student’s signature: Minh

Student’s signature: Quang

Student’s signature: Thy

FINANCIAL ANALYSIS & FORECASTING

CF-DH48ISB-09: Corporate Finance

This report provides an in-depth understanding of the jewellery industry through a

PHU NHUAN JEWELRY JOINT STOCK COMPANY (PNJ) is a Vietnamese joint

In 2019, PNJ achieved remarkable milestones by surpassing its designated target,

Summarised relevant information (About PNJ, n.d.):

● Name of company: PHU NHUAN JEWELRY JOINT STOCK COMPANY

2. Main business fields

BOD Members Positions Education

II. Balance sheet analysis

1. Total current assets and non-current assets

a) Total current assets

b) Total non-current assets

a) Total current liabilities

b) Total non-current liabilities

c) Total stockholders’ equity

III. Income statement analysis

The cost of goods sold is a crucial factor in evaluating a company's financial

3. Earnings before interests & taxes

4. Earnings per common share

IV. Ratio analysis

b) Receivables turnover ratio

Receivables turnover ratio of PNJ experienced a continuous growth over a three-year

ROE measures a corporation's profitability by revealing how much profit a company

IV. Forecasting and scenario analysis

In 2024/2025, we estimate an increase in net revenue because of many effective

in thousands VND 2022A 2023F 2024F 2025F

Revenue 34,211,128,942,240 33,390,061,847,626 36,729,068,032,389 40,034,684,155,304

Discounts (334,674,383,087) (326,642,197,893) (359,306,417,682) (391,643,995,274)

Net Revenue 33,876,454,559,153 33,063,419,649,733 36,369,761,614,707 39,643,040,160,030

Cost of Goods Sold

Gross profit 5,927,106,534,772 6,184,419,862,394 6,619,216,508,472 7,214,945,994,234

Gross profit margin 17.50 18.70 18.20 18.20

Selling expenses (2,828,208,644,376) (2,975,707,768,476) (3,273,278,545,324) (3,567,873,614,403)

General and admin

Total OpEx (3,502,205,641,060) (3,636,976,161,471) (4,000,673,777,618) (4,360,734,417,603)

Operating profit 2,424,900,893,712 2,547,443,700,924 2,618,542,730,854 2,854,211,576,631

EBITDA 2,504,417,270,683 2,626,960,077,895 2,707,702,056,992 2,933,727,953,602

Depreciation 79,516,376,971 79,516,376,971 89,159,326,138 79,516,376,971

EBIT 2,424,900,893,712 2,547,443,700,924 2,618,542,730,854 2,854,211,576,631

Financial income 54,036,974,170 87,886,807,682 89,030,452,849 111,314,251,489

Financial expense (141,471,203,463) (188,510,833,868) (104,741,709,234) (117,022,674,642)

Including: Interest Expense (94,143,431,408) (167,351,370,069) (104,597,986,667) (133,276,321,107)

Net other income (loss) (25,139,109,706) (25,139,109,706) (25,139,109,706) (25,139,109,706)

EBT 2,312,327,554,713 2,421,680,565,031 2,577,692,364,763 2,823,364,043,772