PNJ shares plunge as former subsidiary director arrested in diamond smuggling case

Overview

PNJ shares fell sharply after the arrest of a former director of its subsidiary P-Lab in a diamond smuggling case, triggering margin cuts by multiple securities firms and a profit forecast downgrade by SSI Research. The stock recovered from its floor price on July 8 but remains under pressure as the market awaits further investigation results.

Key Facts

• PNJ shares traded at VND 48,250 on July 8, down 5% from the reference price, after three consecutive limit-down sessions.
• Over 16.6 million shares changed hands in the first hour of trading on July 8, about 15 times the average quarterly volume.
• Market capitalization fell to approximately VND 24,742 billion after four consecutive losing sessions.
• Former director of P-Lab, Dang Ngoc Thao, was prosecuted and detained in a transnational diamond smuggling case.
• TCBS removed PNJ from its margin list; Phu Hung Securities cut margin from 50% to 0%; FPTS reduced from 50% to 30%; SSI cut from 50% to 40%.
• PNJ formed a special supervisory team with two independent board members to oversee P-Lab management.
• SSI Research lowered its 2026 net profit forecast for PNJ from VND 3,569 billion to VND 3,333 billion.

What Happened

PNJ shares experienced a sharp decline after news broke that Dang Ngoc Thao, former director of P-Lab (a 100%-owned subsidiary of PNJ), was arrested in connection with a transnational diamond smuggling case. The stock hit the floor price for three consecutive sessions before recovering on July 8, trading at VND 48,250, down 5% but off the floor.

In response, multiple securities firms reduced or eliminated margin lending on PNJ. TCBS removed the stock from its margin list, while Phu Hung Securities cut the ratio to 0%. FPTS reduced margin from 50% to 30%, and SSI lowered it to 40%, citing adverse information. PNJ issued a statement on July 7 confirming normal operations and announced the formation of a special supervisory team to enhance governance of P-Lab.

SSI Research, which had long maintained a buy recommendation on PNJ, placed the stock under review and lowered its 2026 net profit forecast by 6.6% to VND 3,333 billion. The research unit noted that diamond-related products account for about 33% of PNJ’s jewelry revenue, and consumer confidence could be the biggest risk.

Market Context

PNJ closed at VND 50,800 on July 7, down 6.96% with volume of 994,200 shares, reflecting panic selling. The stock has lost significant value over four sessions, erasing market cap to VND 24,742 billion. The retail sector on HOSE has been under pressure, and PNJ’s situation highlights the vulnerability of companies with exposure to high-value goods and regulatory risks. The margin cuts by major securities firms further amplify selling pressure, though the recovery in buying interest on July 8 suggests some stabilization.

Strategic Significance

The arrest of a former subsidiary director in a smuggling case poses reputational and operational risks for PNJ, a leading jewelry retailer in Vietnam. While PNJ has taken steps to strengthen governance, the incident could erode consumer trust, particularly in diamond products, which are a key revenue driver. The margin cuts and profit forecast downgrade reflect heightened uncertainty. Long-term investors will need to assess the effectiveness of PNJ’s governance enhancements and the potential impact on sales and brand equity.

What to Watch

• Outcome of the investigation by authorities and any further legal actions involving P-Lab or PNJ.
• PNJ’s Q2 2026 earnings release for signs of revenue impact, especially in diamond-related segments.
• Any additional margin changes by other securities firms or reinstatement of margin by those that cut.
• Consumer sentiment surveys or sales data for diamond jewelry in the coming months.
• Updates from PNJ on the special supervisory team’s findings and any changes to subsidiary management.