Foreign investors scramble for TCB shares

17-Oct-2020 Intellasia | Dien dan Doanh nghiep | 6:02 AM Print This Post

In the trading session on October 14, foreign investors’ capital inflows vigorously poured into TCB shares of Vietnam Technological and Commercial Joint Stock Bank (Techcombank).

Ending the session on October 14, the stock rose to the ceiling price of nearly seven percent to 22,850 dong per share, with the matched volume up to 46 million shares. This was the record volume of this stock in the last 10 months. In particular, foreign investors also made put-through transactions of 26.3 million TCB shares, equivalent to 602 billion dong. What was so attractive about TCB shares that absorbed so much cash flow?

Techcombank had just announced its business results for the first half of 2020 with a pre-tax profit of 6.7 trillion dong, up 19 percent over the same period in 2019, equivalent to 51.5 percent of the pre-tax profit target approved by the Annual general Shareholders Meeting (AGM). After-tax reached 5.4 trillion dong, the profit after tax increased by 19 percent compared to the same period in 2019. The rate of return on total assets in the last 12 months reached 2.9%. The capital adequacy ratio (CAR), according to Basel II, reached 16.9%.

The bank’s net interest income (NII) in the first half of 2020 reached 8.1 trillion dong, an increase of 23 percent compared to the same period last year. Service operating income (NFI) reached 2 trillion dong in the first six months of 2020, up 57 percent compared to the first six months of 2019 and accounting for 16.8 percent of total revenue, higher than 13.8 percent of the first half of 2019 due to the vital contribution of underwriting activities of bonds.

In Q2/2020, Techcombank actively made provisions for some bad debts, making provision expenses for the first half of 2020 increase to 1.2 trillion dong compared to 239 billion dong of the same period last year.

TCB’s total assets reached 395.9 trillion dong, an increase of 9.8 percent compared to the end of Q2/2019 and an increase of 3.2 percent compared to the end of 2019. Total outstanding credit of customers as of 30/06/2020 was 265 trillion dong, an increase of 7.4 percent compared to the same period last year and 2.7 percent compared to the end of 2019. The TCB’s ratio of non-term deposits (CASA) at the end of Q2/2020 reached 34.4%, higher than the 30.4 percent recorded at the end of Q1/2019.

Also, TCB had maintained ample liquidity with a loan-to-deposit ratio of 72.5 percent and a ratio of short-term capital for medium and long-term loans at 25.5%, significantly better than the level of 38.4 percent at the end of 2019.

A recent report by VNDirect Securities Company showed that TCB’s full-year projected debt write-off rate was 1.5 percent in the first six months of 2020, up from 0.1 percent in 2019. The non-performing loan (NPL) hit an all-time low of 0.9 percent at the end of June 2020, while the NPL remained steady at 108.6%, the highest after 117.9 percent at the end of Q1/2020.

The State Bank of Vietnam (SBV) had approved TCB to apply a new credit growth limit in 2020 of 13%. With a CAR of about 16.9%, TCB could continue focusing on home loan financing due to the high demand for housing. Furthermore, efforts to increase the CASA rate continued to be effective, raising its net interest margin (NIM) and service income. Therefore, VNDirect still expected TCB’s net profit to achieve a CAGR of 15.7 percent from 2020 to 2022. VNDirect maintained a positive recommendation for TCB stock with a target price of 27,400 dong per share. This target price based on the residual income method (cost of capital was 13.7%; long-term growth was 4.0%; with 50 percent of weight).

The technical indicators were in a positive state. Momentum indicator RSI was still quite far from the overbought zone, so TCB stock could maintain its uptrend in the coming sessions. TCB’s nearest support level was in the area of 20,000 dong to 21,000 dong per share, the profit-taking target of TCB shares was around 26,000 dong to 27,000 dong per share, and cut loss if the threshold of 20,000 dong per share were penetrated.


Category: Finance, Vietnam

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