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STB_Company Update_Valuation is stretched

22/02/2021 - 08:06


TP upside (downside) -4%
Close 08 Feb 2021
Price                               VND 17,400
12M Target                   VND 16,790
Previous Target           VND 12,950
Change                          +30%

What’s new?

Our view

Valuation is stretched

We increase our PATMI forecasts by 13% for 2021E and 12% for 2022E as the net result of higher revenues offset by higher expenses. We now expect PATMI to increase by +34% YoY in 2021E and +22% YoY in 2022E.

We increase our loans growth forecast by 70bps to 13.2% YoY.

NIM forecasts increased by 61bps vs. our previous forecast to 3.16% for 2021E (+40bps YoY). Easy monetary policy will likely persist in 2021, which should support NIM based on lower funding costs.

We increase our fee income forecasts by 3% for 2021E to reach VND4.6 tn in 2021E.

Operating expenses forecast raised by 15% vs. our previous forecast for 2021E.

We also increase our 2021E provisioning assumption by 19% vs our previous forecast to reach VND3.6 tn.

Yuanta vs. consensus. Our increased PATMI forecasts are 11% above the consensus mean for 2021E and 2% higher for 2022E.

Downgrade to HOLD-Underperform on valuation. We continue to view STB as a turnaround play for the long haul. A controlled pandemic and real estate recovery in 2021 should help to accelerate the progress of resolving the legacy non-performing assets. However, the market may have gotten unsustainably excited by M&A chatter, and we can’t recommend chasing the stock at these levels.

STB is trading at 1.0x 2021E P/BV vs. peers’ median of 1.3x, but this must be set against its low adjusted 2021E ROE of 9.8% vs the sector average of 17%. As such, we downgrade the stock to HOLD-Underperform from our previous BUY rating.

For the complete report, please access here: STB_Company Update_Feb 2021

Analyst: Tanh Tran, tanh.tran@yuanta.com.vn