|
Internal strength enough to bring success to Vietinbank’s IPO?
Though the market demand is remaining weak and the stock market is remaning gloomy, Vietinbank’s leaders affirmed that Vietinbank’s 53.6 million shares will not be unsalable at the December 25 IPO. Vietinbank’s Chairman, Pham Huy Hung, even said that slow investors will not be able to purchase the bank’s shares. What are the reasons for Hung’s affirmation?
What does Vietinbank have?
According to the figures audited by Ernst &Young Vietnam, by September 30, 2008, Vietinbank’s total assets had reportedly reached VND 187,534 billion, while the total chartered capital reached VND 7,626 billion, and total outstanding loans reached VND 120 trillion. The bank had invested VND 26,815 billion in securities, 98% of which were Government bonds and valuable papers.
Vietinbank plans to have their total assets increase by 20-22% in 2008 and total outstanding loans increase by 17-18%, while the mobilized capital will rise by 20-22%, and non-performing loans account for 1.2% of total outstanding loans.
With the post-tax profit of VND 1,096 billion in the first nine months of the year, which did not mean a high growth rate due to the difficulties of the national economy, Artex Securities Company has forecasted that the turnover and profit of Vietinbank will not increase considerably in comparison with 2007. Therefore, there will be no big changes with the EPS in 2008. It is expected that the EPS in 2008 will be the same as the EPS of 2007, at VND 1,511, while P/E at 8.2. As such, the price of Vietinbank’s shares would be VND 12,390/share (P = EPS x P/E). According to Artex, the price proves to be suitable with a profitability of the bank in the current conditions.
Meanwhile, according to VnDirect, with the starting price at VND 20,000/share and expected EPS of VND 1,106 for 2008, Vietinbank’s P/E would be 18.08, much higher than the P/E of ACB (8.7) and of STB (8.23), but lower than Vietcombank’s P/E at 29.4. However, Vietinbank’s P/B proves to be impressive, at 1.8, if noting that Vietcombank’s figures are 2.6, 2.8 for ACB and 1.1 for STB.
Nevertheless, with the forecasted profit decrease in the next year and the unclear capability of operation result improvement in the medium- and long-term, VnDirect believes that Vietinbank’s shares at VND 20,000/share is not an attractive investment.
It seems that financial institutions set lower prices than the starting price offered by Vietinbank.
Internal force will bring success
According to Saigon Securities Incorporated (SSI), the equitisation consultant to Vietinbank, the starting price of VND 20,000/share, is not too much higher than the internal value of Vietinbank, valuated by JP Morgan (VND 16,000/share), and the price level can reflect the development potential of Vietinbank.
According to Vietinbank, IPO will succeed thanks to the small volume of shares put for IPO and the low starting share price. Besides, Vietinbank has a good brand name and the investors’ expectations of one of the four biggest banks in Vietnam.
There is another factor that will help bring success to Vietinbank’s IPO, the joining of the bank’s employees in IPO as investors. Each staff member of Vietinbank is allowed to buy 100 shares at the preferential price (60% of the average IPO price) for every year of their length of service. The volume of shares proves to be very low when compared to the real demand for Vietinbank’s shares from the staff. It is very likely that Vietinbank’s staff will join the IPO to purchase more shares, especially as they know the bank better than anyone else. Vietinbank now has 14,334 employees, and just a half of that number joining the IPO would be enough to bring success to the IPO.
According to Vietinbank’s Chairman Pham Huy Hung, 63 securities companies will act as auction agents who will receive orders from investors.
DTCK
|
