{"id":45425,"date":"2020-01-15T08:33:46","date_gmt":"2020-01-15T01:33:46","guid":{"rendered":"https:\/\/yuanta.com.vn\/?post_type=phan-tich&#038;p=45425"},"modified":"2020-01-15T08:33:46","modified_gmt":"2020-01-15T01:33:46","slug":"vpb_regulatory-fears-are-overdone","status":"publish","type":"phan-tich","link":"https:\/\/yuanta-uat.ysvn.com.vn\/en\/analysis\/vpb_regulatory-fears-are-overdone","title":{"rendered":"VPB_Regulatory fears are overdone"},"content":{"rendered":"<p><span style=\"font-size: 18pt\"><strong>BUY<\/strong><\/span><\/p>\n<p><strong>TP upside (downside) +21%<\/strong><br \/>\nClose 14 Jan 2020<br \/>\nPrice\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0VND 21,150<br \/>\n<strong>12M Target\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 25,530<\/strong><\/p>\n<p><span style=\"font-size: 14pt\"><strong>What\u2019s new?<\/strong><\/span><\/p>\n<ul style=\"list-style-type: square\">\n<li>Pessimism over consumer finance regulation is overdone.<\/li>\n<li>FE Credit to drive ROE amid 4-year shift away from cash loans.<\/li>\n<li>Provisioning to fall from 2020E on cleaned up VAMC exposure.<\/li>\n<li>6.8% FOL share release awaits, possibly in 2020E.<\/li>\n<\/ul>\n<p><span style=\"font-size: 14pt\"><strong>Our view<\/strong><\/span><\/p>\n<ul style=\"list-style-type: square\">\n<li>We expect this CIR downtrend to continue given its digital transformation focus.<\/li>\n<li>We assume that provisioning cost for VAMC bonds will no longer exist, which will boost PBT from 2020E.<\/li>\n<li>The plan to sell the remaining FOL shares and the inclusion to VN-Diamond index are possible short-term catalysts.<\/li>\n<\/ul>\n<p><span style=\"font-size: 14pt\"><strong>Regulatory fears are overdone<\/strong><\/span><\/p>\n<p><strong>Cheap valuation: A 20% discount to peers. <\/strong>VPB trades at 1.0x 2020E P\/BV despite 2020E ROE of 22% (higher than the peer median of 19%). This reflects an undue level of pessimism, in our view.<\/p>\n<p><strong>Fear over consumer finance regulation is a key reason\u2026<\/strong> The mandatory 30% cap on cash loans sounds scary given FE Credit\u2019s c.70% cash loan ratio<strong>. <\/strong>However, this requirement is not immediate: consumer finance firms have until 2024 to reach the 30% cap. Assuming FEC\u2019s cash loan ratio is 70% in 2021E, 60% in 2022E, 50% in 2023E, and 30% in 2024E, our intrinsic value estimate is still 21% higher than the market price.<\/p>\n<p><strong>\u2026and full-FOL status could be another<\/strong>. Full-FOL stocks have generally underperformed open-FOL stocks. We are reluctant to pound the table on full-FOL names given the premium and settlement issues, but VPB\u2019s current FOL premium of 7-9% appears reasonable to us. VPB plans to issue the remaining 260 mn FOL shares via private placement in 2020E, but liquidity may not improve much pending the adoption of NVDRs.<\/p>\n<p><strong>Digital transformation drives cost efficiencies. <\/strong>VPB\u2019s consolidated adjusted CIR of 37.8% in 4Q18-3Q19 is the third lowest in the sector, which is all the more impressive given its retail focus. We expect this trend to continue due to the bank\u2019s digital transformation.<\/p>\n<p><strong>VN-Diamond index inclusion <\/strong>could be a short term catalyst for the stock. We reckon that US$100m in inflows into the VN-Diamond ETF would represent about 10 days\u2019 trading in VPB\u2019s shares.<\/p>\n<p><strong>We initiate coverage with BUY. <\/strong>We believe that VPB is mispriced and deserves a premium over its peers vs the current discount. Our target price of VND25,530 implies 1.3x 2020E P\/BV.<\/p>\n<p>For the complete report, please access here: <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/01\/VPB_Initiation_Jan_2020_Final.pdf\">VPB_Initiation_Jan_2020_Final<\/a><\/p>\n<p><strong>Analyst: Tanh Tran,<\/strong>\u00a0<em>tanh.tran@yuanta.com.vn<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>BUY TP upside (downside) +21% Close 14 Jan 2020 Price\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0VND 21,150 12M Target\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 25,530 What\u2019s new? Pessimism over consumer finance regulation is overdone. FE Credit to drive ROE amid 4-year shift away from cash loans. Provisioning to fall from 2020E on cleaned up&#8230;<\/p>\n","protected":false},"author":10,"featured_media":0,"template":"","class_list":["post-45425","phan-tich","type-phan-tich","status-publish","hentry","analysis-category-financials","analysis-category-initiation-report"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.3 (Yoast SEO v23.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>VPB_Regulatory fears are overdone | Yuanta Vietnam<\/title>\n<meta name=\"description\" content=\"BUY TP upside (downside) +21% Close 14 Jan 2020 Price\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0VND 21,150 12M Target\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 25,530 What\u2019s new? 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