The paradox appears in the case of SaigonBank

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

Although there was nothing more outstanding than the underrated banks, Saigon Bank for Industry and Trade (Saigonbank, UPCoM: SGB) seemed to be listed with a too-high valuation.

Overpricing

When being compared with other underrated banks listing at UPCoM such as An Binh Commercial Joint Stock Bank (ABBank), Viet Capital Commercial Joint Stock Bank (Viet Capital Bank), Kien Long Commercial Joint Stock Bank (Kienlongbank), Petrolimex Group Commercial Joint Stock Bank (PGBank), SaigonBank had its indicators nothing more outstanding, even many indices were lower in both scale and operational efficiency. However, these banks had relatively modest stock prices, or the current market price was much lower than SGB’s listing price.

For example, in VietCapital Bank, which had a slightly higher charter capital than SaigonBank (3.171 trillion dong compared to 3.080 trillion dong), the total assets ranked the bottom of the 35 joint-stock commercial banks. SaigonBank’s pre-tax profit in 2019 was higher than VietCapital Bank’s, reaching 144 billion dong compared to 126 billion dong. The capital adequacy ratio (CAR) was much higher than VietCapital Bank at 14.26%, while that of SaigonBank was only 8.5%. However, SaigonBank’s CAR did not follow Basel II because the bank had not met this standard.

Meanwhile, the listing price of BVB was several months ahead of SGB, at only 10,700 dong per share. Even BVB’s peak price was set up after the listing, could not touch the ranking of the SGB stock at the launch price. The fact that SGB shares fell deeply after the listing and returned to only half of the original market price was also in the investors’ forecasts, although the banking group’s stocks continued to increase quite strongly compared to the whole market last time.

The stock risk fell further

One push for SGB shares to continue falling to the bottom was that SaigonBank’s leaders had considered the opportunity to be present at UPCoM as the time to sell this stock.

After being on the stock exchange on October 15, SaigonBank announced the information on insiders’ stock trading, expected to be carried out from November 15 to November 10, 2020. The transaction registered to sell was Nguyen Ngoc Luy, deputy general director of SaigonBank, with nearly 248,000 SGB shares and Pham Hoang Hong Thinh, deputy general director of SaigonBank, selling nearly 107,000 SGB shares. Previously, Thinh registered to sell the above shares from July 24 to August 24, but with no success.

It was not a big deal for the leaders to register to sell shares, often with favourable prices than the book prices, right after SaigonBank was listed on the floor. However, in the case of SGB, the story did not stop there. One of the advantages of SGB was the identity of a bank with State capital (Hochiminh City Party Committee) and state-owned companies, including the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank). In another aspect, this was also the ‘Achilles heel’ of SaigonBank when it had to compete in the marketplace, and the state managers did not commit to accompany the business. This seemed to be paradoxical when previously, SaigonBank announced a sudden six-month profit, completing 96 percent of the 2020 plan, although the bank had adjusted its target to decrease by more than 28 percent compared to the previous year.

Nguyen Tri Hieu said that the competitiveness raising of small banks, not only SaigonBank, also had shortcomings. The focus on lending areas such as real estate would make it difficult for the organisation’s long-haul.

With such developments, it was likely that SGB shares would continue to fall deeply, to correct their valuation in the near future, especially when SGB shares were being dominated evenly in the hands of many organisations with a relatively low rate of freely transferred shares.

 

Category: Finance, Vietnam

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