Company Report

Using an unchanged target PBR of 3.0x applied to our 2020E post-money BVPS, we derive our new 12-month target price of VND92,700 (from VND82,400), which offers upside potential of 11.7% from the current trading price of VND83,000 per share. Please note that this does not take into account cash dividends of 8% at par in 2019E and 2020E that we had previously assumed. Therefore, we upgrade our rating on the stock from Market Perform to OUTPERFORM.

At the current price of VND 51,000 per share, VEA is only trading at a 2019 & 2020 PER level of 8.4x and 7.4x, which is a much lower valuation compared to the overall market of ~14.5x. Meanwhile, the dividend yield came to 7.6% for 2019 and 9.8% for 2020. Our target price for VEA is VND 65,000/share (from VND 63,500/share after accounting to its 2020 forecast) for the 12-month investment horizon, with an upside of about +27%. Therefore, we changed our rating to BUY from MARKET PERFORM given the recent drop. We believe this is a great opportunity to accumulate the stock for long term investors, with attractive dividend yields as well as potential capital gain.

We raise our 12-month target price to VND82,400, based on an unchanged PBR target of 3.0x applied to our 2020E BVPS of VND27,452 (previously VND81,300 using 2020E BVPS of VND27,093), for a potential upside of 2.36% from the current price of VND80,500. Please note that this does not consider the cash dividend of 8% at par in 2019E and 2020E. Given the limited potential upside, we maintain our Market Perform rating.

Based on audited financial statements, 2018 BVPS and EPS of BVH were VND 22,065 and VND 1,612 respectively. At the current price of VND 81,300 per share, the stock is trading at 2018 PBR and PER of 3.7x and 50.4x respectively. Based on the company’s 2019 plan, 2019 BVPS and EPS of BVH on a respective basis are estimated at VND 22,748 and VND 1,676, with current PBR and PER at 3.57x and 48.5x. We estimate that if the capital issuance is implemented in 2H 2019, at the price equal to 3 times BVPS as of June 2019 at VND67,220 per share, BVH would have the proceeds of VND 2.785 tn. 2019F BVPS would pop up at +11% to VND 25,231. The PBR at current price would then be 3.22x.

BIDV (BID: HOSE) posted VND9.473tn in PBT, translating into 9.3% YoY growth in 2018. This level of PBT growth is quite weak compared to the industry average of 31.6%, but this was not a surprise as the bank was still making progress in resolving its legacy bad debt, while desperately lacking capital to fuel credit growth. At the market price of VND32,850 per share, BIDV is trading at a 2019E PBR of 2x and a post-money 2019E PBR of 1.7x.

VCB announced that it has successfully issued 111.1m shares by way of private placement, increasing its charter capital by 3.088% to VND37.089tn. The buyers are GIC Private Limited (GIC – the investment arm of Singapore government) and Mizuho Bank Ltd (VCB’s current strategic shareholder). VCB would receive proceeds of VND6.2tn, or c.USD265m from the issuance. We estimate an issuance price of VND55,500 per share, which is equal to a 2018E PBR of 3.22x. We raise our 12-month TP to VND68,600 (from VND63,100), based on an unchanged 2019E PBR of 3.0x. As our new TP offers some 25% potential upside from the current price and given SSI’s view of 10% return for the VNIndex in 2019, our rating bands call for a BUY rating (from NEUTRAL).

At VND 23,100 per share, CTG is trading at 2018 and 2019 PBRs of 1.3x and 1.2x respectively, which is lower than the industry 2019 PBR average of 1.5x. The lower than average valuation is reflected upon possible 2018 losses the bank may have to absorb. We expect Vietinbank will have to deal with additional NPLs in 2019, while credit growth is expected to be capped due to the inherent difficulty in raising Tier 1 capital. Taking into consideration all of the facts at hand, we recommend a stance of Underperform for the stock, with a 1Y target price of VND 23,000 per share, equivalent to a 2019 PBR of 1.2x.