{"id":53562,"date":"2020-04-14T08:21:42","date_gmt":"2020-04-14T01:21:42","guid":{"rendered":"https:\/\/yuanta.com.vn\/?post_type=phan-tich&#038;p=53562"},"modified":"2020-06-26T15:31:14","modified_gmt":"2020-06-26T08:31:14","slug":"mbb_cheap-valuation-for-high-quality-bank","status":"publish","type":"phan-tich","link":"https:\/\/yuanta-uat.ysvn.com.vn\/en\/analysis\/mbb_cheap-valuation-for-high-quality-bank","title":{"rendered":"MBB_Cheap valuation for high quality bank"},"content":{"rendered":"<p><span style=\"font-size: 18pt\"><strong>BUY<\/strong><\/span><\/p>\n<p>&nbsp;<\/p>\n<p>TP upside (downside) +64%<br \/>\nClose 13 Apr 2020<br \/>\nPrice \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 15,750<br \/>\n12M Target\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 25,900<br \/>\nPrevious Target \u00a0\u00a0 VND 28,690<br \/>\nChange\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -10%<\/p>\n<p><span style=\"font-size: 14pt\"><strong>What\u2019s new?<\/strong><\/span><\/p>\n<ul style=\"list-style-type: square\">\n<li><strong>We slash our earnings forecasts<\/strong> by 11% for 2020E and 12% for 2021E.<\/li>\n<li><strong>Loan growth revised down <\/strong>by 1ppt to 13.5% for 2020E.<\/li>\n<li><strong>NIMs<\/strong> will be under pressure.<\/li>\n<li><strong>We also cut our fee income forecast <\/strong>by 22% for the 2020E-21E.<\/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><strong>We reiterate our BUY rating<\/strong> despite this earnings downgrade.<\/li>\n<li><strong>Quality is key <\/strong>in the current murky business environment. MBB is ranked 2<sup>nd<\/sup> in our <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/02\/Banks_CAMEL_07.02-2019_Updated.pdf\">CAMEL rating<\/a> framework.<\/li>\n<li><strong>Attractive valuation for a high quality bank<\/strong>. MBB is now trading at 0.8x 2020E P\/BV vs. 0.9x for peers.<\/li>\n<\/ul>\n<p><strong><span style=\"font-size: 18pt\">Cheap valuation for high quality bank<\/span><\/strong><\/p>\n<p><strong>Reducing our credit growth forecast. <\/strong>We lower our 2020E loan growth forecast for MBB by -1ppt to 13.5% YoY.<\/p>\n<p><strong>NIM forecasts cut <\/strong>by 28bps to 4.83% for 2020E<em>. <\/em>We expect MBB and its peers to follow the SBV\u2019s policy in reducing lending rates to support enterprises during this difficult time. However, MBB\u2019s status as Vietnam\u2019s <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2019\/06\/MBB_Initiation_Jun-2019.pdf\">king of CASA<\/a> should help limit the downside for its NIM.<\/p>\n<p><strong>We slash our fee income forecasts <\/strong>by 22% for 2020E-21E given the weak near-term outlook for transaction banking and the <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/04\/Banks-to-cut-service-fee-and-delay-cash-dividend_Express-Note.pdf\">SBV\u2019s order to cut settlement fees<\/a> by at least 50% to support clients.<\/p>\n<p><strong>Rising provision costs and NPLs<\/strong>. Although MBB\u2019s NPL ratio declined by 17bps to 1.16% in 2019, the net charge-off ratio jumped by 1ppt to 2.12% YoY, and provision costs surged by 61% YoY. Also, banks are rescheduling payments and retaining pre-outbreak asset quality categorization of related loans, which is likely to continue through 3Q20 at least. Thus, MBB\u2019s provisioning will likely rise.<\/p>\n<p><strong>We slash our PATMI forecasts by<\/strong> -11% for 2020E and -12% for 2021E. We are now 5% below consensus for 2020E and 1% for 2020E. This still represents growth of +11% YoY in 2020E and +18% YoY in 20201E.<\/p>\n<p><strong>King of CASA. <\/strong>MBB has the highest CASA ratio in the sector at 38% in 2019 vs. the sector median of 14%. This is a competitive advantage that should be especially apparent in cushioning the NIM downside as banks to cut lending rates to support COVID-impacted borrowers.<\/p>\n<p><strong>Reiterate BUY\u2014 Valuation is attractive for a high quality bank like MBB. <\/strong>The stock\u2019s 0.8 x 2020E P\/BV is highly attractive vs. our (reduced) forecast of 19% ROE in 2020E. Even with the reduced target price of VND25,900, we still see 64% upside, and we maintain our <strong>BUY<\/strong> rating.<\/p>\n<p>For the complete report, please access here: <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/04\/MBB_Company-Update_14.04.2020.pdf\">MBB_Company Update_14.04.2020<\/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 &nbsp; TP upside (downside) +64% Close 13 Apr 2020 Price \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 15,750 12M Target\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 25,900 Previous Target \u00a0\u00a0 VND 28,690 Change\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 -10% What\u2019s new? We slash our earnings forecasts by 11% for 2020E and 12% for 2021E. Loan growth revised down by 1ppt to 13.5% for 2020E. NIMs will be under pressure&#8230;.<\/p>\n","protected":false},"author":10,"featured_media":0,"template":"","class_list":["post-53562","phan-tich","type-phan-tich","status-publish","hentry"],"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>MBB_Cheap valuation for high quality bank | Yuanta Vietnam<\/title>\n<meta name=\"description\" content=\"BUY &nbsp; TP upside (downside) +64% Close 13 Apr 2020 Price \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 15,750 12M Target\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 25,900 Previous Target \u00a0\u00a0 VND 28,690\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MBB_Cheap valuation for high quality bank\" \/>\n<meta property=\"og:description\" content=\"BUY &nbsp; 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