Income Statement analysis

[Link] of Income Statement

Sales/Revenue Growth: The Sales/Revenue has shown a consistent increase over the
three years, indicating a positive trend in the company’s operation. It increased each
year from $17,510,789 in 2020 to $19,547,058 in 2021 and significantly jumped to
$33,876,455 in 2022.
Net Income: It also increased each year from $1,069,310 (6.10% of revenue) in 2020 to
$1,032,918 (5.28% of revenue) in 2021 and significantly jumped to $1,692,997 (5.00% of
revenue) in 2022. , which could be due to the factors mentioned following. Net Income
Percentage Decrease: The net income percentage decreases slightly each year,
indicating that while the company’s revenue is growing, its profitability is decreasing
Cost of Goods Sold (COGS): Over the years, the COGS as a percentage of Sales/Revenue
has experienced a slight increase. This upward trend could be attributed to factors such
as inflation, rising production costs, or shifts in the product mix. Gross Income: The
Gross Income, expressed as a percentage of Sales/Revenue, has seen a modest decline.
This decrease may be linked to the corresponding rise in COGS. SG&A Expense (Selling,
General & Administrative): Interestingly, the SG&A Expense as a percentage of
Sales/Revenue has slightly decreased. This suggests improved operational efficiency in
managing selling, administrative, and general expenses. EBIT (Earnings Before Interest
and Taxes): EBIT, a key profitability metric, has remained relatively stable. This
consistency indicates that the business has maintained a steady level of profitability
over time. Interest Expense: The Interest Expense, relative to Sales/Revenue, has
decreased. This reduction could be due to lower debt levels or more favorable interest
rates. Pretax Income: The Pretax Income, as a percentage of Sales/Revenue, has
remained relatively steady. This implies consistent performance before accounting for
income taxes. Income Tax: The Income Tax, expressed as a percentage of
Sales/Revenue, has also slightly decreased. This reduction may reflect changes in tax
regulations or effective tax planning.

Based on the financial data provided, here are some strategies that PNJ could consider
to increase their revenue and sales: Optimize Costs: Analyze the Cost of Goods Sold
(COGS) and SG&A Expense to identify areas for cost reduction while maintaining quality.
This could increase the net income and profitability. Product Diversification: Introduce
new products or services to attract a broader customer base. This could increase the
sales/revenue. Market Expansion: Explore new markets or regions where the products
or services can be sold. This could increase the sales/revenue. Enhancing Marketing
Strategies: Improve marketing efforts to increase brand awareness and attract more
customers. This could increase the sales/revenue. In summary, both sales/revenue and
net income have seen a consistent increase over the three years. The net income as a
percentage of sales/revenue decreases slightly each year but the absolute value
increases. This suggests that while the company is expanding and generating more
revenue, it may need to look into its cost management to improve its net income.
In general, the proportion of sales contributions by each channel of PNJ in 2020-2022
has no clear change. The significant disparity between retail sales and gold bar sales
over the years is 37.6%, 33.9%, and 35.9%, respectively. This is because PNJ has adeptly
captured market trends by delving deeper into the retail jewelry market rather than the
traditional gold bar market. Retail jewelry typically commands higher profit margins
compared to gold bar sales. By focusing on this segment, PNJ potentially improves its
overall profitability and financial performance.
Revenue Trend:
The blue line represents revenue, which shows a significant increase over the three
periods (2020 to 2022). In 2020, revenue was approximately 3.5 billion VND By
2021, revenue sharply rose to nearly 20 billion. VND. In the current year (2022), revenue
soared above 30 billion VND.
Gross Profit Stability:
The red line represents gross profit, which remains relatively [Link] revenue
fluctuations, gross profit hovers around 3 to 5 billion VND in all three years.
Implications:
The consistent stability in gross profit suggests effective cost management. PNJ has
been able to maintain profitability even as revenue fluctuates. In summary, PNJ’s ability
to manage costs and maintain profitability is evident from this chart. The increasing
revenue trend further supports their financial performance.

Change in Revenue

Change in COGS

Change in Net Operating Income

Based on the demonstration, both the revenue and COGS saw an upward trend over the
period, with a notable increase in 2022. A key observation is the Net Operating Profit in
2021, which was lower than that of 2020, but showed a gradual increase in 2022. The
substantial rise in COGS resulted in diminished returns for the PNJ [Link]
Operating Profit: It starts at approximately 1.35 billion in 2020 and rises sharply to
about 23.38 billion in 2022, showing a significant increase over the years.
Cost of Goods Sold and Service Rendered: It begins at around 14.07 billion in 2020,
slightly decreases in mid-2021, then increases again reaching approximately 15.95
billion by the end of 2022. This line remains relatively stable over the years. In summary,
while the cost of goods sold and service rendered has remained relatively stable, the net
operating profit has seen a significant increase from 2020 to 2022. This could indicate
improved efficiency or increased sales over this period.

b. Revenue and expense analysis

Operating income: Operating income has fluctuated over 3 years. In 2021, it will
decrease by nearly 43 billion VND, equivalent to a decrease of nearly 3% compared to
2020. However, by 2022, it will increase sharply by nearly 1031 billion VND at a rate of
78.9% compared to 2021. PNJ has accelerated spectacularly to become Vietnam's
leading retail enterprise with a modern technology platform and new opening
acceleration system, reaching nearly 400 stores nationwide.
Nonoperating income There is a significant growth in non-operating revenue from 2020
to 2021 with an increase of more than 3 billion VND at a rate of 61.5% compared to
2020, then a slight decrease of nearly 270 million VND in 2022 with a rate of 3.1%
compared to 2021. Initial growth may reflect success in the company's investments and
other financial activities.
Operating expense This sharp decrease in business costs from 2020-2021 (down 26.8%)
shows that the company has implemented cost-saving measures or optimized
operations effectively when the economy is affected by Covid 19. Although business
costs increase from 2021 to 2022, revenue also increases, but this increase rate (19.6%)
seems insignificant compared to revenue growth (73.8%). This shows that the company
may have managed costs effectively, not letting costs increase too quickly relative to
revenue, and continuing to focus on sustainable growth.

c. Profitability analysis

The table presents a comparison of financial ratios over three years: 2020, 2021, and
2022. It includes five key financial metrics: ROE (Return on Equity), ROA (Return on
Assets), Net Profit Margin, Gross Profit Margin, and Operating Profit Margin. Each
metric is represented as a percentage for each year.
ROE: In 2020, it was 20.40%, decreased to 17.11% in 2021, and increased to 21.44% in
2022. ROA: It was 12.60% in 2020, decreased to 9.69% in 2021, and increased to 13.58%
in 2022. Net Profit Margin: It started at 6.05% in 2020, decreased to 5.21% in 2021, and
slightly increased to 5.29% in 2022. Gross Profit Margin: It was 19.43% in 2020,
decreased to 18.23% in 2021, and further decreased to 17.32% in 2022. Operating Profit
Margin: It was 7.61% in 2020, decreased to 6.48% in 2021, and slightly increased to
6.76% in 2022.
This table provides a clear overview of the company’s financial performance over the
three-year period. These figures suggest that while the company’s return on equity and
assets are expected to improve, the profit margins are projected to continue their
decline. This could indicate a variety of factors at play, such as increased costs, changes
in pricing, or shifts in the company’s product mix. It would be beneficial to look into
these aspects for a more comprehensive understanding of the company’s performance.

d. Changes of components in income statement and conclusion

If based year is 2020, In comparison we have:

The chart, titled “Growth Rate”, is a bar graph that compares the growth rates of
Revenue, Gross profit, and COGS (Cost of Goods Sold) for the years 2021 and 2022
against the base year 2020. Each category has two bars, one for each year. The y-axis
represents the growth rate percentages, ranging from 0% to 200%.
Revenue: The growth rate for 2022 is approximately 193.48%, while for 2021 it’s around
111.61%. Gross Profit: The growth rate for 2022 is close to 171.27%, and for 2021 it’s
near 103.98%. COGS: The growth rate for 2022 is approximately 198.56%, and for 2021
it’s around 113.30%.
The chart effectively illustrates the comparative growth rates for these key financial
indicators over the specified periods. It provides valuable insights into the company’s
financial performance and operational efficiency. In conclusion, based on the chart, the
year 2022 saw significant growth in Revenue, Gross profit, and COGS compared to the
base year 2020.
These figures suggest that while PNJ was able to increase its revenue and gross profit in
2022, it also experienced a rise in the cost of goods sold (COGS). This could have
implications for the company’s profitability and may require strategic adjustments
moving forward.

e. Credit analysis
2020: The Net Profit Margin decreased from 6.05% to 5.21%, and the Gross Profit
Margin also decreased from 19.43% to 18.23%. This suggests that the company faced
challenges in maintaining or enhancing profitability after deducting all costs. The
Operating Profit Margin was 7.61%, indicating a portion of profit higher than the net and
gross profits, which may imply an increase in non-core expenses during operations.
2021: All three profit ratios decreased compared to the previous year, with the Net
Profit Margin decreasing from 5.21% to 5.29%, the Gross Profit Margin from 18.23% to
17.32%, and the Operating Profit Margin from 6.48% to 6.76%. The decline in
profitability ratios in 2021 may reflect pressure from the challenging business
environment due to the COVID-19 pandemic. This decrease could create challenges for
the company's ability to meet its financial obligations.
2022: Despite a slight increase in the profit ratios compared to the previous year, they
are still lower than in 2020, indicating that the company continues to adapt to the
volatile business environment. The flexibility and adaptability of the company could be a
positive factor in assessing its creditworthiness.
Both ROA and ROE have shown an upward trend from 2020 to 2022. This indicates an
improvement in utilizing assets and equity to generate profits. The consistent and
continuous growth of ROA and ROE over the three years is a positive sign of stability and
sustainability for the company. Despite minor fluctuations between years, the profit
margins have remained at a reliable level. According to international standards, if a
company has an ROE (Return on Equity) higher than 15% and an ROA (Return on Assets)
greater than 7.5%, it indicates that the company has sufficient financial capability.
Looking at the data, we can see that from 2020 to 2022, both ROA and ROE of PNJ have
been above this standard level.
In summary, the consistent growth of ROA and ROE over the past three years is a
positive indication of the company's operational and financial performance, providing
confidence to investors and lenders alike.
Net revenue
2020 2021 2022
PNJ 17500 19500 33800
SJC 23500 17700 27200
Unit: billion VND

Looking at the chart, in 2020, PNJ's net revenue was lower than SJC, This is because
SJC primarily focuses on trading gold bars, which have a selling price ranging from 50-60
million VND, resulting in very high revenue, whereas PNJ focuses on the jewelry
segment, with selling prices starting from only 5 million VND and above. During this
year, the global and Vietnamese economies were still facing the crisis, with the US
government maintaining a weak dollar policy, causing gold prices to continue to rise and
significantly boosting revenue from trading gold bars.

However, from 2021 to 2022, consumer demand for jewelry in Vietnam was affected
by the economic downturn. Additionally, gold prices were influenced by the central
bank's monetary policies, leading to an increase in gold prices and a subsequent
decrease in consumer demand for jewelry.
Profit after tax
2020 2021 2022
PNJ 1069 1033 1807
SJC 56 43 49
Unit: billion VND

Looking at the chart, we can see a significant difference in the net profit after tax
between PNJ and SJC from 2020 to 2021; namely, 1,013 billion VND, 990 billion VND,
and 1,758 billion VND, respectively. Although SJC's net revenue in 2020 was higher than
PNJ's, and there was not a significant difference in 2021 and 2022, the net profit after
tax for SJC was much lower than PNJ's.
The main reason is that SJC mainly focuses on wholesale gold trading rather than heavily
developing the retail segment for jewelry, unlike PNJ. Although the gold bar trading
industry generates substantial revenue, the resulting profits are insignificant. The gross
profit margin for gold bars typically ranges from 0.1% to 0.5%.
In recent years, gold trading enterprises have been gradually shifting their product
structure towards jewelry gold, and diamonds, which are products with much higher
profit margins compared to gold bars. PNJ is a typical case of improved business results
due to product structure shifts. During the 2010 - 2011 period, gold bars still accounted
for a large proportion of PNJ's revenue structure. However, thanks to the change in
product structure towards jewelry gold, PNJ's after-tax profits have continuously
improved, while SJC and DOJI remain relatively "loyal" to the traditional gold bar trading
business segment.