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[BSC Vietnam] March In A Minutes (LPB) 06.04.2018 (DELAYED)

Summary

March in a Minutes. Macro Flash: GDP Q1 + 7.38% (highest in 10 years), PMI 51.6, registered FDI down but Disbursed FDI + 7.2% yoy, CPI -0.27%,.

Market Flash: Vnindex +4.72% mom and P/E stand at 21, Foreigner net sold ~ USD 30 mill,.

A TA View: our TA see the Vnindex can reach 1250 before pull back slightly. The jump in liquidity drain the supply of margin lending again. And with many bluechip’sskyhigh.

LPB LienViet Postbank (VND 15,200/share, + 1.3%, market cap of USD 478 million). On 06, April, 2018 LPB was traded at P/B of 1.1x, much lower than peers (2.54x). We have a visit to LienViet Postbank this week and our Banking analyst are very bullish with LPB.

Dear Value Clients and partners;

· U.S. equity futures dipped in response to the news that China will firmly fight back the trade war. But in Vietnam, like recent month, market is up half a percent. Material is a clear winner with +1.97% gain, followed by real estate (+0.83%) and industries (+0.82%). As usual, in a hot trading day, defensive sectors were hit, as consumer discretionary down -1.0%, Health care -1.4%.

Today’s Markets

· Indexes : VN-Index +0.45%, HNX-Index +0.92%, Upcom +0.36%

· Active : HOSE: STB, HPG, SSI, VIC, VJC. HNX: ACB, SHB, PVS, CEO, VGC.

· Index movers : Leader: VRE, VIC, ROS, HPG, PLX Laggard: MSN, NVL, PNJ, BHN, DHG

· Foreigner, Buy: HPG, VNM, AAA, VND, DHG. Sell: VJC, NVL, SSI, MSN, HAG

· Notice stocks : STB, FPT, DXG, VRE, SBT, PDR, ACB, MBS, DS3, LPB, VCW

· Trading volume : ~ 352.6 million shares

· Trading value : VND 9211 bil ~ 405.8 USD mil

· Foreigner transaction Net: -3.6 mil USD Sell 45.5 USD million and Buy 42 USD million

· Derivative market: Trading value ~ USD 71.9 million, VN30F1805@ 1,180.2; VN30F1806@ 1,185; VN30F1809@ 1,200.7

Corporate update:


· LPB LienViet Postbank (VND 15,200/share, + 1.3%, market cap of USD 478 million). On 06, April, 2018 LPB was traded at P/B of 1.1x, much lower than peers (2.54x). We have a visit to LienViet Postbank this week and our Banking analyst are very bullish with LPB (as much as she was bullish about MBBand ACB in our Strong buy call a year ago).

The credit growth was approved by SBV was 14%, while, LPB sets 20% loans growth. The bank plans to control NPLs ratio under 1.5%, and get VND 1,800 billion EBT, dividend at minimum of 12% in 2018. BSC forecast that 2018 EAT will be VND 1,536 billion, + 12% yoy, then, EPS will be VND 2,278/share, BV will be VND 15,803/share. LPB is traded at attractive valuation, even for an Upcom Banking ticker. May be the last of its kind.

Investment highlights: (1) LPB owns deep and nationwide distribution with more than 1,533 banks’ branches & transaction offices and operating rights of more than 10,000 post offices in almost every towns in Vietnam (biggest network if we compare to all other enterprises in Vietnam, not limited to Bank). In addition, 185 post offices was approved to convert into bank’s offices, then LPB can boost its banking services. (2) Loans increased by 26.29%yoy in 2017, CAGR at 51.3% during 2008-2017. Low pure LDR at 78% allows the banks continue to boost its loan growth in the coming years. (3) High CASA (current account savings Account) at 28.39% (second only to MBB) bring higher NIM. In 2017, NIM was 3.6%, ROA, ROE was 0.9% and 15.45%, respectively, higher than median of sector (0.87% and 14.3%, respectively). (4) NPL ratio was low, at 1.07%. If including VAMC bonds, NPL ratio up to 2.01%. Total doubtful assets was VND 8,911 billion, equal to 94.97% total equity, lower than peers (123%).

Catalysts:. The bad news is that they decide to lock foreign ownership to 5%, and preserve the other 25% for strategic investors. They said that they are discussing with potential strategic partners, no further information provided.

Risks: (1) Mortgage loans and construction loans accounted for about 38% of total loans (~ VND 38,000 billion). Other concerned assets of VND 1,160 billion relates to real estate sector and Him Lam. Therefore, we believe that provision expenses will raise in coming years. (2) If Government bond rate and repo rate up, income from security trading and investment will reduces.


Comments:

· March in a Minutes. Macro Flash: GDP Q1 + 7.38% (highest in 10 years), PMI 51.6, registered FDI down but Disbursed FDI + 7.2% yoy, CPI -0.27%, export up 15.4% yoy to USD 19.8 billion, USD/VND slightly up and interest rate stable, Credit grow + 2.2% (vs 2.41% in Q1 2017). Market Flash: Vnindex +4.72% mom and P/E stand at 21, Foreigner net sold ~ USD 30 mill, average trading value slightly up to USD 363 million; market cap reached USD 150 billion (VNindex + HNXindex) Detail report here

· A TA View: our TA see the Vnindex can reach 1250 before pull back slightly. The jump in liquidity drain the supply of margin lending again. And with many bluechip’s valuation sky high, Investor might benefited from more reasonable valuation smaller cap and industries.

· During last March, we have updates on the following stock: TNG (Link), PGI (Link), DXG (Link), AAA (Link), BSR (Link), Techcombank (Link), CVT (Link), PVT (Link), DIG (Link), VSC (Link), ACB (Link), VIS (Link), EIB (Link), NT2 (Link), CSM (Link), DPM (Link), GDT (Link), VIB (Link), DRC (Link), VGT (Link), TCM (Link), CSV (Link), DPR (Link), VPB (Link), HPG (Link), PNJ (Link), PVS (Link), PVB (Link), MBB (Link). English version will be available soon.


Chart of the day 06nd April 2018: Vietnam Index outperform world index in Q1/2018


Have a great weekend

Cheers


Long Tran