Company Report: OCB - Small bank with high growth
Transforming itself in terms of growth strategy and management in recent years, OCB is set to become a modern retail bank focusing on providing financial products and services to small and medium enterprises (SMEs) and upper-mass individual customers. With a strong capital buffer and leading liquidity, OCB is able to maintain high credit growth compared to the industry. Low-risk appetite and the supply chain financing risk management model combined with a modern technology platform help the bank control credit risk at a good level compared to other banks of the same size and customer segments, thereby stabilizing risk-adjusted NIM at an effective level. Together with an increasingly diverse service income structure and a selectively invested digital transformation strategy for the purpose of improving operational efficiency, we expect OCB to be able to maintain its top-of-the-market profitability in the next five years. The balance sheet may expand by an average growth rate of 23%/year in the period 2021-2025, following the recovery momentum of the economy and stimulus packages. The stock is trading at a 1-year forward P/B of 1.4x, 30% lower than the average of listed banks (excluding VCB), although forecasted ROE (before bonus and welfare fund) is 17% higher.
We estimate the fair value of OCB at VND32,100/share, equivalent to a forward P/B for 2021 and 2022 of 1.7 and 1.3 times, respectively. This price is equivalent to an expected return of 22% compared to the closing price on December 21st, 2021. Therefore, we issue a BUY recommendation for OCB.
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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