Joint Stock Commercial Bank for
Foreign trade of Vietnam (VCB)
Hose – Banking The highest chartered capitalized 201 2011/10/12 Joint Stock Bank in Vietnam
Overweight Valuation: We initiate an Overweight rating for VCB with a target price of VND 33,000. We recommend long- term safety investment for VCB because the Price (2011/10/07): VND 26,500 offering price to sell for strategic partner Mizuho
Bank is VND 34,000. Target Price: VND 33,000 Vietcombank sells to Mizuho 15% of the total
issued shares at the value of about 567.3 million Ms.Linh Nguyen Ngoc (+ 84-4) 3933-4571 USD or 11,800 billion dong, a highest value of all [email protected] time in M&A in Vietnam.
Basic Index Overview of Banking Industry in 2011 Vietnam Lowest price in 52 weeks VND 25,900 Banking continues to play an important role in Highest price in 52 weeks VND 38,000 managing monetary policy to stabilize macro
Average trading volume in 10 days 641,493 economy, control inflation, and assure social security in 2011. Outstanding shares 2,317,417,076 Market cap (billion) VND 4,843.7 Remarkable management solution: tight monetary policy management, liquidity support for Finance Index commercial banks, and control the credit growth at EPS 1,229 lower than 20% via control money supply; adjust P/E 9.9 re-discount interest rate and overnight interest rate; P/B 1.54 and suitably adjust bank-union average exchange ROA 1.4 rate.
ROE 18.8 The State Bank sees more effort on checking and
controlling banks operation, seriously deals with CAR 9.0% regulation breaking in banking system. Book Value VND16,600
Cash Dividend VND 1,200 Dividend Yield (Dividend / market Facts: price) 4.53% Savings interest rate in July and August is stabled Total asset - Q2/2011 (trillion dong) VND 344.207 at 14% compare to the sudden raise in the first and Total Equity – Q2/2011 (trillion second quarter of this year, loans interest rate is dong) VND 27.555 also controlled around approachable number. Owning structure Agriculture loans interest rate is 17-19%, non- State Bank 90.72% production loans’ is 22-25%. USD interest rate is Foreign investors 5.34% stabled.
Individual investors 3.85% Credit growth as of Sep 23rd 2011 is 8.16% L *The holding cap for foreign strategic investors is 49%. compare to the end of last year; so compare to the For banking sector the cap is 30%. target (adjusted from 15-17%), credit growth room in Q4 is quite large.
Effort in adjusting gold price: in Q3, domestic gold price saw big changes; there was time that it is
phs.vn higher than the world price by 3 million dong/tael. The State Bank has timely notified the people to be careful from speculation and price manipulation. At the same time, the State bank also carried out many solutions to stable the market.
www.
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Company Profile:
Chart 1: Owning structure of VCB – Q2/2011 VCB was established in 1963 and operated in
foreign economy sector including im-export
support loans and other foreign economic
services.
In 1996, changed to state owned commercial
bank. Now, VCB is the first Vietnam Bank which
professionally works on foreign economy and
reputation of supplying international payment
products and has relations with many other world
leading banks.
Being the first state owned commercial bank chosen for pilot equitizing, Vietcombank officially appeared as a Joint Stock Commercial Bank in June 2nd 2008 after successfully equitized th via IPO. On June 30 2009, Vietcombank stock (VCB) was officially listed on HOSE. VCB is the second biggest bank on market cap
(1.97 billion USD), after Vietinbank (2.05 billion USD) over 43 state owned and private
Source : VCB commercial banks of Vietnam. VCB ranked number 4 (after Agribank, BiDV, and Vietinbank) on total asset.
Chart 2: M&A cases of others banks Strategy partner Mizuho and ranking motives: After a long time seeking for foreign strategy partner, on September 30th 2011, VCB has signed the offering contract to raise the chartered capital from 19.698 trillion to 23.174 trillion dong with Mizuho Corporate Bank, Ltd. the offering rate is 15% chartered capital after issuance at the price of VND 34,000. By selling shares for foreign partner at the largest scale in banking history and in M&A history of Vietnam, VCB is still at its top ranking for commercial bank in Vietnam. With advantages of raising capital, VCB will focus on develop credit growth, widen the network and develop services and technology. As we evaluate, next year is still a hard year for economy and banking, so VCB’s problem is handling the management of equitized capital efficiently as stated, and solve the troubles that
the company is facing.
Source : stox .vn
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Phu Hung Securities Corporation
Chart 3: Business Result of VCB Finance situation in Q2/2011 – reviewed financial report – combined business result report Profit index of Q2 and the first 6 months of 2011. Index % Gross Profit NIM 3.15% Q2/2011, VCB saw 2,687 billion dong of net Non-interest income 12.6% interest income, up by 7.5% YOY. Services brought 446 billion dong of net profit, up by almost 2 times YOY. Business stock and Asset Quality Investment stock brought a loss of nearly 14 Index % billion dong in Q2; the profit wasn’t much at NPLs/debt balance 3.5% the same period last year. Bad debt/debt balance -98.1% Q2/2011’s net profit is 986.33 billion dong, Provision/NPLs 3.4% down by 7.83% YOY. Provision/debt balance -1.2% In the first 6 months 2011, VCB saw 2,420.88 Provision CF/debt balance 0.0% billion dong of EAT, up by 13.23% compare to 2,138.02 billion dong at the same period last Financial Health year. Index %
CAR (First grade) 9.0%
Debt balance/Savings 8.7% Equity/Asset 14.4% Equity/Liability 8.0% Equity/Debt balance 108.5%
Source: PHS
Financial Abstract:
Revenue Outstanding Change Net Profit Change Year (VND Shares EPS P/E (x) ROE (%) ROA (%) % (VND bil) % bil) (mil ) 2006 10,729.28 1,292.55 435.67 2,967 8.93 25.85 1.72
2007 13,697.20 27.66% 2,877.02 122.58% 442.93 6,495 4.08 17.69 1.21 2008 12,567.81 -8.25% 2,397.67 -16.66% 1,210.09 1,981 13.37 9.12 0.55 2009 18,941.23 50.71% 1,214.92 -49.33% 1,322.00 919 28.84 23.46 1.53 2010 24,563.94 29.69% 3,921.36 222.77% 1,322.10 2,966 8.93 20.39 1.37 2011E 28,985.45 18.00% 4,214.54 7.48% 1,759 2,396 11.06 24.3 1.69 2012E 34,782.54 20% 4593.85296 9% 2317.417 1,982 13.37 17.72% 1.36% 2013E 43,478.18 25% 5099.176786 11% 2317.417 2,200 12.04 17.56% 1.35%
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Phu Hung Securities Corporation
Chart 4: Combined business result report for Q2/2011
Source: VCB
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Analyst Certification
Each research analyst(s), strategist(s) or research associate(s) responsible for the preparation and content of all or any identified portion of this research report hereby certifies that, with respect to each issuer or security or any identified portion of the report with respect to each issuer or security that the research analyst, strategist or research associate covers in this research report, all of the views expressed by that research analyst, strategist or research associate in this research report accurately reflect their personal views about those issuer(s) or securities. Each research analyst(s), strategist(s) or research associate(s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst, strategist or research associate in this research report.
Ratings Definition
Overweight (OW) = Expected to outperform the local market by >10% Neutral (N) = Expected to in line with the local market by +10%~ -10% Underweight (UW) = Expected to underperform the local market by >10%. Not Rated (NR) = The stock is not rated in Phu Hung’s coverage universe or not listed yet. Performance is defined as 12-month total return (including dividends).
Disclaimer
This information has been compiled from sources we believe to be reliable, but we do not hold ourselves responsible for its completeness or accuracy. It is not an offer to sell or solicitation of an offer to buy any securities. Phu Hung Securities and its affiliates and their officers and employees may or may not have a position in or with respect to the securities mentioned herein. Phu Hung Securities (or one of its affiliates) may from time to time perform investment banking or other services or solicit investment banking or other business for any company mentioned in this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice. © Phu Hung Securities Corporation. 5th Fl., Lawrence S. Ting Bldg., 801 Nguyen Van Linh St, Tan Phu Ward, Dist 7, HCMC Tel: (+84-8) 5413-5479 – Fax: +84 8 54135472 Web: www.phs.vn
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