Earnings Report /
Vietnam

Military Commercial: Q3 19: Growth driven by other income

    Anh Nguyen
    Rong Viet
    17 October 2019
    Published by

    MBB’s parent bank achieved a positive growth of 41.2% in TOI and 39.2% yoy in PBT in Q3 19 (which raised yoy earnings growth to 28.5% in 9M 19 from 22.5% in H1 19). Excluding income transferred from associates, actual earnings growth was 29.6% for Q3 and 23.0% for 9M. This growth was largely driven by income from securities trading and debt recovery instead of net interest or service income.

    Meanwhile, operating expenses and provision charges continued to rise. Considering moderate growth of the parent bank, we hold the view that consolidated earnings growth will still be driven by the insurance and consumer finance business of associates, though operating and provision burden in Q3 is expected to be pressured.

    In September, MBB has paid 8% share dividends, as well as announced the plan to issue 43.2mn ESOP shares (2% of charter capital) at face value to its employees in Sept/Oct. The bank is still on plan to issue 141mn primary shares (5.63% of post-money charter capital) and 47mn treasury shares (1.87% of post-money charter capital), by the end of Q4 19.

    MBB is currently trading at VND23,350, equivalent to a PBR 2019f of 1.4x. The stock price is 22.0% lower than our target price of VND28,500. We thereby reiterate our Buy recommendation on the stock.