TPB_Tien Phong Bank_BSC_Vietnam company visit note_EN_ICB8355

Valuation
TPB is going to list 555 million shares on HOSE on 19, April, 2018 at starting price of VND 32,000 /share, equivalent to P/B of 2.66x, relatively high compared to other listed banks (2.54x), 2018’s P/B of 1.63x.
2018 business plan.
TPB sets target of 18% loan growth and 66% EAT growth in 2018 and then 22% loans CAGR and 32% EBT CAGR during 2018-2022. 2018’s EAT will be VND 1,600 billion equivalent EPS of VND 2,883/share and the BV of VND 19,690/share.
Business updates (pg 2 for more details)
•    2017’s EAT is up by 70.49%yoy to VND 964 billion, yoy as a result of loans grew by 35.97% yoy, NIM improves from 2.79% to 2.94%, non-interest income rose by 133%yoy.
•    1Q2018 updates. EBT was VND 513 billion, up by 149% yoy. NPL ratio was 0.95%
•    TPB has not realized VND 2,400 billion profit from appreciation in price of G-bonds as March 2018.
•    Impressive improvement in efficiency. NIM up to 2.94%, ROA, ROE increased from 0.62% to 0.84% and from 10.79% to 15.59%.
•    NPL ratio was at 1.1%, if including NPLs sold to VAMC, the ratio up to 2.05%. NPL coverage ratio was 97%, relatively high compared to other listed banks (mean of 79.49%).
•    TPB is the pioneer in digital banking in Vietnam. Digital products will attract new customers and satisfy young customer demand following by increasing CASA, deposit and income.
•    Raising charter capital to VND 8,550 billion from current charter capital of VND 5,842 billion.
Investment risks
•    Doubtful assets accelerated to VND 10,863 billion (+125% yoy).
•    Liquidity risks.
•    Interest increase risk.