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Bank on bank stocks for healthy profits, say analysts
Bank stocks should be among the biggest gainers in what’s left of 2009, according to analysts with the finance website Vietstock.
As can be seen in the following table, the median price-earnings ratio (P/E) of Vietnam’s joint-stock banks is currently 15.8, well below the local stock market’s 20.2.
The time to buy is now, say the Vietstock analysts, as the banking sector’s P/E will approach the overall market rate by the end of 2009.
At foreign stock exchanges, bank stocks are among the crowd favorites as their projected or forward P/E is higher than the market’s median rate, according to Vietstock’s research department.
In Vietnam, the forward P/E of bank stocks is also higher than the overall market, which should slightly exceed 20 at the end of the year.
Their ROAE (return on average equity) bodes well for the near-term too as it stands at 20.96 percent compared to the Southeast Asia’s median rate of 16.63 percent (see chart).
As far as Vietstock is concerned, bank stocks are a gilt-edged opportunity for investors.
Healthy earnings
The bigger banks are well on their way to beating their 2009 forecasts.
Hanoi-based Joint Stock Commercial Bank for Foreign Trade of Vietnam, or Vietcombank, has just reported a pretax profit of VND2.5 trillion ($140.5 million) for the first half of 2009.
This number represents 74 percent of the full-year target set by the nation’s third-biggest bank by assets, which began trading on the Ho Chi Minh Stock Exchange on June 30.
Total assets of Vietcombank were valued at VND222 trillion at the end of June, the bank says on its website, without providing comparable figures.
Another outperformer is the Vietnam Export-Import Commercial Joint Stock Bank.
Eximbank, as it is better known, reported a pretax profit of VND813 billion ($46 million) for the first half, according to an article in Dau Tu Chung Khoan.
The lender is targeting a full-year profit of VND1.5 trillion, the investment magazine says.
Eximbank’s total assets rose by 32 percent from the end of 2008 to stand at VND8.62 trillion as of June 30, according to Dau Tu.
The bank, which is backed by Sumitomo Mitsui Financial Group, anticipates listing on the Ho Chi Minh City Stock Exchange next year, having postponed the move in 2008 because of the global financial crisis.
A third lender to shine in the first half of 2009 is Vietnam Bank for Industry and Trade with a pretax profit of VND2.1 trillion.
Le Duc Tho, head of the bank’s Investment Department, declined to provide year-earlier figures in a telephone interview from Hanoi Thursday.
Vietinbank, as the country’s fourth-biggest lender is known, is estimating a pretax profit of VND3.5 trillion for this year, chairman Pham Huy Hung said on May 26.
The bank raised VND1.09 trillion in an initial public offering on December 25 when the government sold 53.6 million shares at an average of VND20,265.
“Despite the rosy prospects, bank shares are treading water at the moment as investors are putting their money into the first sectors to rebound from the global downturn, like seafood and construction materials,” Vietstock’s analysts said.
“Since bank stocks are bound to rise sharply as the economy revives, they are our top picks for the medium-to-long term.”
On August 28, central bank governor Nguyen Van Giau said Vietnam had raised its credit growth limit for the nation’s commercial lenders this year to 30 percent from the earlier 25-27.
Tai Viet
thanhnien
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