Title LPB_BUY_TP 11,120 VND_Upside 22.2%_Switch to listing on HOSE in 2019_BSC Company Update
Report Type Phân tích công ty
Source BSC
Industry Financials
Bussiness LPB
Detail Date : 22/03/2019
Total pages : 6
Language : English
File Type : .PDF
FileSize : 883 Kb
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Short Content

Valuation

We recommend BUY for LPB shares with a target price of VND 11,120 / share, 22.2% upside with P / B method = 0.8x (current industry average = 1.5x). We assess that LPB is a cheap stock with growth potential. However, the bank now has to restructure the transaction offices and reduce the amount of deposits causing the profit of LPB to be affected. 
 
Forecast of business results 2019. 
BSC forecasts that LPB will record TOI and PBT at VND 5,464 billion (+ 12% yoy) and VND 1,393 billion (+ 14.8% yoy) assuming (1) credit growth reaches 14%, ( 2) NPL = 1.42%, bad debt ratio = 100%, (3) NIM slightly decreased, down to 3.08%, (4) CIR = 62%, (5) social work expenses at VND 550 billion. 
 
Investment Risk
Reduce CASA influence NIM, CIR at high level.
 
Business update (Refer to page 2 for details) 
2018 business results. In 2018, LPB recorded TOI and PBT at VND 4,879 billion (-4.4% yoy) and VND 1,213 billion (-31.4% yoy).
Net interest income reached VND 5,020 billion (-4% yoy). Credit growth + 17.31%, lending + 18.46% yoy, mobilizing -2.59%. Loan/deposit ratio reached 95.4%, NIM = 3.14%.
Large expenses affect the bank's profit. In 2018, LPB incurred subsidies (about VND 355 billion), social work expenses (about VND 500 billion) increased CIR to 62.5% (same period 55.1%). 
Bad debt + 56.5% yoy. NPL increased sharply, reaching 1.39%. Increasing bad debts led to a sharp increase in provisioning, provision expenses + 18.5% yoy, affecting the bank's profit. The rate of bad debt is at 88.25%.
LPB plans to switch to listing on HOSE in 2019. In addition, the increase of wool chartered capital of VND 10,300 billion (issuing nearly 287 million shares to existing shareholders and employees) may be implemented this year.