Title VCB_TP 66,616 VND_Upside 11%_Selling strategic capital_BSC Company Update
Report Type Phân tích công ty
Source BSC
Industry Financials
Bussiness VCB
Detail Date : 22/03/2019
Total pages : 6
Language : English
File Type : .PDF
FileSize : 884 Kb
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Short Content
Valuation
We recommend TRACKING with VCB shares with a target price of VND 66,616/ share, upside 11% by P/B method = 3.4x with the expectation of selling capital to strategic shareholders in 2019.
 
Forecast of business results 2019 
We forecast that VCB will record TOI and PBT in 2019 to reach VND 44,988 billion (+ 14.5% yoy) and VND 20,654 billion (+ 12.9% yoy). If excluding extraordinary income from divestment, PBT of VCB increased by 24.6% yoy. This forecast is based on the assumption that (1) credit growth in 2019 will reach 14%, equivalent to the target set by the SBV, (2) lending + 15.19% yoy, mobilizing + 11.3% yoy, mobilizing/deposits reached 81.7%, lower than the SBV ceiling, (3) NIM improved to 3% due to continued loan structure and conversion of retail lending, (3) NPL = 0.97% , the ratio of bad debt = 165%, (4) off-balance sheet bad debt recovery reached VND 3,500 billion.
 
Investment Risk
High valuation, P / B = 3.4x (industry average = 1.5x).
 
Business update (Refer to page 2 for details) 
2018 business results. In 2018, VCB recorded TOI and PBT at VND 39,288 billion (+ 33.61% yoy) and VND 18,300 billion (+ 61.4% yoy). 
Net interest income + 29.5% yoy due to (1) credit growth in 2018 reached 14.78%, (2) NIM improved to 2.77%, (3) high CASA rate, 28.3% mobilization structure.
Non-interest income + 29.5% yoy and currently accounts for 27.7% TOI, In our opinion, the sustainable profit structure of banks (about 70% of profit comes from net interest income). 
Asset quality continues to improve. NPL = 0.97% (industry average = 1.65%), bad debt coverage ratio = 165% is the highest in the whole industry. 
Continue to pursue strategic sales with GIC in 2019. In early 2019, VCB sold 3% (average price of about 58,000 VND/share) and is expected to continue selling 7% to GIC strategic partner in 2019