Saigon Thuong: Efficiency Gains and “Core Income” Growth Drivers

LPB: Moving Mostly in the Right Direction

LPB: Oversold Given Value-Quality Characteristics

Ho Chi Minh Development JSCB: Benign Fundamental Momentum

Saigon Hanoi Commercial: A Forsaken Franchise

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

Vietnam Joint Stock Commercial Bank For Industry and Trade / Equity Bottom-Up

Vietnam Joint Stock Commercial Bank For Industry and Trade (CTG VN)

Vietnam Joint Stock Commercial Bank For Industry and Trade

While we remain mindful of certain aspects of Vietnam’s Banking Sector, regarding Provisioning and Capitalization levels as well as other Balance Sheet concerns, we cannot be impressed by another strong PH Score™ quarter, and by the growth generated. Not as good as Pakistan, in terms of PH Score™ but in second place globally. We highlight two of the less expensive institutions.CTG <a href="https://www.smartkarma.com/entities/vietnam-js-commercial-bank-f" target="_blank" data-smartkarma-citation="entities:647:1" rel="noopener">Vietnam Js Commercial Bank F (CTG VN)</a> With a PH Score™ of 8.3, Vietnam JSCB of Industry and Trade commands robust Profitability progression, an expanding NIM, better Efficiency while Capitalization and Liquidity show discrete improvement. This bank has a more muscular profile than SHB though LDR is still too elevated.The shares are somewhat more expensive than we would normally pay for a bank. A FV of 12%, a PBV of 1.39x, and an Earnings Yield of 10% are not unattractive though given the growth underway. They trade above common-sense thresholds of 10%, 1x, and 10%, respectively.  However, these are not “out of sight” valuations and most lower-rated entities have nowhere near the growth that CTG possesses.SHB <a href="https://www.smartkarma.com/entities/saigon-hanoi-commericial" target="_blank" data-smartkarma-citation="entities:17575:1" rel="noopener">Saigon Hanoi Commericial (SHB VN)</a> With a PH Score™ of 10, Saigon Hanoi is progressing. Profitability is expanding with a fatter NIM and a lower CIR. Improvement is broad with advances in Asset Quality, Capitalization, Liquidity, and Provisioning. A “full house” if you like. Caveats stem from a high LDR and D/E, low coverage of NPLs, and still lowly Capital Adequacy and Liquidity Asset ratio levels. This is a softer profile despite the Score than many other Vietnam lenders.A FV of 10%, a PBV of 1.1x, and an Earnings Yield of 12.6% are not unattractive and reflect risk. They trade in close proximity to common-sense thresholds of 10%, 1x, and 10%, respectively.

While we remain mindful of certain aspects of Vietnam’s Banking Sector, regarding Provisioning and Capitalization levels as well as other Balance Sheet concerns, we cannot be impressed by another strong PH Score™ quarter, and by the growth generated. Not as good as Pakistan, in terms of PH Score™ but in second place globally. We highlight two of the less expensive institutions.CTG Vietnam Js Commercial Bank F (CTG VN) With a PH Score™ of 8.3, Vietnam JSCB of Industry and Trade commands robust Profitability progression, an expanding NIM, better Efficiency while Capitalization and Liquidity show discrete improvement. This bank has a more muscular profile than SHB though LDR is still too elevated.The shares are somewhat more expensive than we would normally pay for a bank. A FV of 12%, a PBV of 1.39x, and an Earnings Yield of 10% are not unattractive though given the growth underway. They trade above common-sense thresholds of 10%, 1x, and 10%, respectively.  However, these are not “out of sight” valuations and most lower-rated entities have nowhere near the growth that CTG possesses.SHB Saigon Hanoi Commericial (SHB VN) With a PH Score™ of 10, Saigon Hanoi is progressing. Profitability is expanding with a fatter NIM and a lower CIR. Improvement is broad with advances in Asset Quality, Capitalization, Liquidity, and Provisioning. A “full house” if you like. Caveats stem from a high LDR and D/E, low coverage of NPLs, and still lowly Capital Adequacy and Liquidity Asset ratio levels. This is a softer profile despite the Score than many other Vietnam lenders.A FV of 10%, a PBV of 1.1x, and an Earnings Yield of 12.6% are not unattractive and reflect risk. They trade in close proximity to common-sense thresholds of 10%, 1x, and 10%, respectively. 

CTG: Vietnam Opportunities: Growth of Risk Rather than Risk of Growth