In early April 2018, VN Index suddenly ended its uptrend and plummeted from 1,200 to 940 points at a stretch. It has then gradually recovered but only recorded 1,000 points at several sessions. The peak of 1,200 point seems to be very far-fetched in investors’ expectations.
Before creating the peak, banking group was one of the groups of stocks recorded the most impressive growth in the market. Investors through bank stocks were regaining the position of “king stocks” that had been created for many years.
When the uptrend stopped, the “king stocks” also quickly fell.
From more than 73,000 dong per share (calculated at the adjusted price) at the end of the session on April 3rd 2018, VCB stock of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) dropped to 46,000 dong per share at the closing time of the May 28th 2018 session, equivalent to a decline of up to 37 percent in less than two months.
In less than two months, BID shares of Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) lost over 50 percent of their value, and CTG shares of Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) lost over 40 percent of their value.
Two other banks in the top banking group (group with banks with equity of above 30 trillion dong as of June 30th 2019 and targeted profit of 10 trillion dong in 2019) including Military Commercial Joint Stock Bank (MB) and Vietnam Prosperity Commercial Joint Stock Bank (VPBank) were also in similar situation. The market price of MBB shares of MB fell by more than 40 percent from the peak, while VPB shares of VPBank lost 37 percent of their value.
The remaining big bank Vietnam Technological and Commercial Joint Stock Bank (Techcombank) listed two months after the VN Index hit the peak.
Although the VN Index has fluctuated recently around 960 1,000 points, stocks of the top banking group has been finding their old peaks and some of which have recorded achievements.
The most typical case if Vietcombank. From the beginning of the year until now, VCB shares have risen from 53,600 dong per share (closing the session on January 2nd 2019) to 81,000 dong per share (closing the session on July 27th 2019), equivalent to an increase of over 50 percent.
Closing the session on September 12th, VCB share price was still stable at a higher level than the previous peak: 79,500 dong per share.
For BID shares, the price movements are also in a positive direction. BID’s market price closed the September 12th session at 38,650 dong per share, equivalent to the price at the end of April 2018, only about 6,400 dong per share from the old peak set in April 2018, equivalent to about 17 percent.
Although it is not very obvious but MBB shares are also heading to its old peak when breaking out from the zone of 20,000 30,000 dong per share. On August 28th 2019, MBB’s market price reached 23,350 dong per share, almost hit a new peak after the peak set up on October 4th 2018 (at 23,360 dong per share).
Closing the session on September 12th, MBB share price stood at 23,100 dong per share.
The uptrend of the above mentioned stocks is hard to come from the market in general, because the VN Index is still seeing not very positive movements. It mainly comes from the movements in the core activities of banks.
For Vietcombank, it is the solid business foundation with impressive profit growth (61 percent in 2018 and 41 percent in the first half of 2019), helping the bank maintain its leading position in profit, completely outperforming other banks. Meanwhile, for BIDV, the uptrend is thanks to the sale of stake to foreign partner, the expectation of the finalisation of bad debt settlement, and the largest credit market share in the system.
Meanwhile, the motivation for MB’s stock price uptrend is the sale of share to foreign investor and profit growth. The growth profit target of the bank in 2019-2024 period reaches up to 20 percent per annum, the highest in the system. Along with that is the sale of stake to foreign partner as well as the expansion of foreign ownership room (MB expects to sell 7.5 percent of its charter capital to foreign partner in 2019).
In addition, with a low Price per Earning of just about seven times, while the average of the banking industry is over 12 times, MBB shares are also attractive to investors.
VPB shares of VPBank have not shown clear recovery signs, despite certain improvements in the last three months. In a recent move, VPBank’s shareholder meeting approved the plan to repurchase a maximum of 10 percent of the outstanding shares to be used as treasury shares.
According to the bank’s leader, VPB’s market value at the present does not correctly reflect the real value as well as the growth potential of VPBank. The purchase of treasury shares aims to reduce the amount of shares in circulation, in order to increase the profit per share for investors, and it can be considered as the bank’s investment in a valuable asset which has high profitability in the future.
