MBB_Company Update_Quality at reasonable valuation
25/03/2021 - 11:15
TP upside +24%
Close 24 Mar 2021
Price VND 27,600
12M Target VND 34,233
Previous Target VND 25,900
% Change +32%
- We increase our target price by 32% on increased earnings forecasts and a reduced discount rate.
- We increase our earnings forecasts by 7% for 2021E and 4% for 2022E.
- Loan growth assumption raised by 2.4ppt to 15.6% for 2021E.
- Reiterate BUY. MBB trades at 1.3x 2021E P/BV with 2021E ROE of 20%.
- Strong asset quality with high LLR ratio gives MBB the flexibility to reduce provisioning and boost earnings.
- King of CASA. MBB’s strong current and savings account deposit franchise should continue to drive profitability.
Quality at reasonable valuation
Increased loan growth assumption. We raise our 2021E loan growth forecast for MBB by 2.4ppt to 15.6% YoY versus our previous forecast of 13.2% YoY.
NIM forecast slightly decreased by 2bps to 4.92% for 2021E (+11bps YoY) after adjusting the loan mix and increasing the denominator.
Operating expenses cut by 4% vs our previous forecast for 2021E.
2021E provisioning forecast cut by 12% to VND5.8 tn (-5% YoY).
Net-net, we raise our PATMI forecasts 7% for 2021E and 4% for 2022E, implying PATMI growth of 33% YoY in 2021E and 21% in 2022E.
Yuanta versus the consensus. Our PATMI forecasts are now above the consensus mean by 6% for 2021E and 8% for 2022E.
MBB’s high LLR ratio gives it more flexibility than most banks have to reduce provisioning and boost future earnings.
Reiterate BUY. MBB trades at 1.3x 2021E P/B versus the sector median of 1.5x.
We raise our target price to VND34,233 (US$1.59), implying 1.6x 2021E P/BV based on our higher earnings forecasts and reduced discount rate.
MBB is a high-quality bank with strong operational results that we believe deserves a valuation premium over its peers. We expect MBB’s 2021E ROE to reach 20% compared to the sector median of 19%. Our new price target of VND34,233 implies 12-month TSR of 26%, and we maintain our BUY rating.
For the complete report, please access here: MBB_Company Update_Mar 2021
Analyst: Tanh Tran, email@example.com