Analyst Pin-board ACB – Building the buffer
- ACB posted flat earnings growth in 3Q21 due to the surge in credit costs. The bank also witnessed a deterioration in its balance sheet health regarding NPL, LLR and restructured debt. It has made full provisions of restructured debt earlier than required.
- We value ACB’s conservative provisioning policy in the context of increasing restructured loans, group 2 debt degradation and NPL formation which might last for one or two quarters. Concern arises as ACB attempts to boost credit growth in the last quarter while the economy is in an uncertain recovery. In the base case, we think the tension on earnings will continue to last. We revise down the 2021-2022 PBT forecasts to VND 12.4 trillion and VND 15.5 trillion, translating to year-on-year growth of 29% and 26%.
- Despite the potential of posting weak earnings growth in the short-term, ACB is expected to take advantage of the economic recovery. The 2021-2022 book value per share is estimated at VND 16,788 and VND 20,692. As we shift the 2022-2025 ROE curve upward due to lower pressure on the provisioning policy, we also upgrade the target price to VND 39,100/share, up 5% from the previous valuation. This translates to an upside of 20% from the closing price of November 01, 2021 and a BUY
Asia Commercial Joint Stock Bank (ACB) is a Vietnam-based financial institution. The Bank provides consumer and corporate commercial banking services, including deposits, corporate and consumer lending, as well as trade financing. It is also involved in capital and money markets at interbank level, along with treasury activities, commodities financing and international clearing and settlement. Through its subsidiaries and affiliates, the Bank provides investment banking services, such as securities brokerage, custody and underwriting services, along with corporate advisory services. Other activities include gold bar manufacturing and asset management.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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