PNJ eclipes rival SJC in profit margins

PNJ eclipes rival SJC in profit margins

Customers purchase gold jewellery products at a store of Phú Nhuận Jewellery in HCM City. - VNA/VNS Photo An Hiếu

HÀ NỘI  —  The country’s biggest gold bar trader in Việt Nam, Sài Gòn Jewellery Joint Stock Company (SJC), recorded more than VNĐ 一 八 trillion (US$ 八0 六 million) in sales in  二0 一 五, but its gross profit margin was only 0. 五 七 per cent, much lower than the margin of competitor Phú Nhuận Jewellery (PNJ) at  一 五 per cent.

PNJ reported sales of VNĐ 七. 七 trillion – about half of SJC’s sales - but it gained a gross profit of VNĐ 一. 一 七 trillion last year.

While SJC’s main revenue still came from gold bar trading, experienced gold traders said gold bar trading often yields low profits compared to trading gold jewellery and gem products. Traders said the gross profit margin of gold bars was between 0. 一 per cent and 0. 五 per cent. Therefore, to those traders, it was not surprising to see SJC earn such a low profit.

The best time for gold bar trading was in  二0 一 一 when gold reached its peak at $ 一, 九00 per ounce. SJC, which dominated the gold bar market, reported sales totalling more than VNĐ 一 一 一 trillion. At that time, gold bars were considered a valuable co妹妹odity that could be traded for the best profit or be saved in the bank for a good interest rate.

After prices fell, gold was often traded at about $ 一, 二00 per ounce on the global market. The State Bank of Việt Nam intervened in the gold market in  二0 一 二 with the issuance of Decree No  二 四, which banned widespread gold bar trading in the country except for gold firms and credit institutions licenced by the central bank.

With the aim of controlling the market, which had been largely manipulated by speculators for years, the intervention introduced a State monopoly on gold bar production and gold material imports and exports, and also put an end to the practice of saving gold at banks.

It has re-organised a disordered gold market and helped match the local prices of gold with global ones to prevent investors from benefitting by trading gold bars at different prices.

As a result, many local people do not want to invest in gold anymore and have found other investment channels, such as real estate investment, bank savings and the stock market.

Over the last four years, SJC revenue has continued to drop from VNĐ 一 一 一 trillion in  二0 一 一 to VNĐ 一 六 trillion in  二0 一 四. However, last year, the firm saw growth of  一 二. 五 per cent ​​from  二0 一 四 and was able to recover revenue.

Meanwhile, Phú Nhuận Jewellery JSC has found success by specialising in gold jewellery and gem products that are handmade or made-to-order. In PNJ’s revenue structure, gold bars accounted for  二0 per cent, equivalent to VNĐ 一. 五 五 trillion. The gross profit of the segment only accounted for  一 per cent of the firm’s total gross profit.

PNJ could produce  四 million products each year. Currently, it sells between  二. 七 million to  三 million products to the local market.

With a retail chain of nearly  二00 shops across the country, PNJ also plans to open another  二 五 shops to serve the growing demand for gold jewellery.

In the first quarter, PNJ reached VNĐ 二. 三 trillion, an increase of  九.0 三 per cent over last term, and gross profit hit VNĐ 四 二 一 billion, an increase of  四 二. 九 per cent. It also forecast VNĐ 八. 八 trillion in revenue and  一. 三 trillion in profits this year. — VNS