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Saigon Hanoi Commercial: A Forsaken Franchise

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

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

Ho Chi Minh Development JSCB: Benign Fundamental Momentum

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Thematic (Sector/Industry)

Vietnam Financials / Thematic (Sector/Industry)

To date, FY20/19 PH Scores™ out of Vietnam have caught the eye relative to SE Asia and other global jurisdictions. Despite a raft of adverse anecdotal news, concerning the real estate and export markets, which are caveats to consider, the fundamental momentum remains robust and better than elsewhere – with the exception of perhaps Pakistan which has still to report in full. We are also mindful of the fact that the Vietnamese system is still quite immature, in the process of transitioning towards Basel 11, and there is ample scope to “catch up” regarding best practice, disclosure, and overall governance. In the case of LPB, there is now at least greater regulatory oversight than before with transition to the main market.LienViet Post JSCB dedicates itself to mainly corporate, SME, and rural market and to a lesser extent the consumer segment, backed by source of funding from especially time deposits.FY20/19 results show positive fundamental momentum and trends with improvement in Profitability, in Efficiency, In Liquidity, in headline Asset Quality (given the expansion of the denominator), and in Provisioning while Capital Adequacy and NIM/Spread showed some lightweight erosion (in the case of NIM/Spread in particular). Growth in “Core Income” was robust, given the inflation of the Balance Sheet, while “non-core Income” streams showed dynamism, which together more than offset the increase in LLPs given headline Asset Quality issues and the disincentive to charge-off more bad debt.<div class="content-highlight">
A FV of 9%, a PBV of 1.1x, and an Earnings Yield of 8.5% are not unappealing. The bank commands both a high PH Score™ (8.5) and top quartile VFM ranking.
The PH Score™ is a fundamental momentum-quantamental score that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage as well as a valuation variable. Scores lie between 0 and 10, with higher scores representing more positive signs. The PH Score™ was back tested over 2007-17 for global banks and conclusively shows progressively higher returns across quintiles ranked by Score. 
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To date, FY20/19 PH Scores™ out of Vietnam have caught the eye relative to SE Asia and other global jurisdictions. Despite a raft of adverse anecdotal news, concerning the real estate and export markets, which are caveats to consider, the fundamental momentum remains robust and better than elsewhere – with the exception of perhaps Pakistan which has still to report in full. We are also mindful of the fact that the Vietnamese system is still quite immature, in the process of transitioning towards Basel 11, and there is ample scope to “catch up” regarding best practice, disclosure, and overall governance. In the case of LPB, there is now at least greater regulatory oversight than before with transition to the main market.LienViet Post JSCB dedicates itself to mainly corporate, SME, and rural market and to a lesser extent the consumer segment, backed by source of funding from especially time deposits.FY20/19 results show positive fundamental momentum and trends with improvement in Profitability, in Efficiency, In Liquidity, in headline Asset Quality (given the expansion of the denominator), and in Provisioning while Capital Adequacy and NIM/Spread showed some lightweight erosion (in the case of NIM/Spread in particular). Growth in “Core Income” was robust, given the inflation of the Balance Sheet, while “non-core Income” streams showed dynamism, which together more than offset the increase in LLPs given headline Asset Quality issues and the disincentive to charge-off more bad debt.
A FV of 9%, a PBV of 1.1x, and an Earnings Yield of 8.5% are not unappealing. The bank commands both a high PH Score™ (8.5) and top quartile VFM ranking.
The PH Score™ is a fundamental momentum-quantamental score that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage as well as a valuation variable. Scores lie between 0 and 10, with higher scores representing more positive signs. The PH Score™ was back tested over 2007-17 for global banks and conclusively shows progressively higher returns across quintiles ranked by Score. 


LPB: Moving Mostly in the Right Direction