Equities | Vietnam | Banks

Orient Commercial JSB (OCB - HSX)

Flashnote

31 March 2025

 

Source: Company, HSC Research estimates

 

Share price performance

Source: Company, FactSet

 

Summary financials and valuation

Year end: Dec
12-24A
12-25F
12-26F
Total assets (VNDtn) 281 322 364
Customer loans (VNDtn) 176 208 247
Total op. inc. (VNDtn) 10.1 12.1 14.0
Net profit (VNDtn) 3.17 3.83 4.42
BVPS (VND) 12,844 14,399 16,190
EPS (VND) 1,287 1,555 1,791
DPS (VND) 0 0 0
Customer loan gr. (%) 19.1 18.4 18.4
Total op. inc. gr. (%) 12.7 20.1 16.0
EPS growth (%) (3.91) 20.8 15.2
DPS growth (%)
nm
nm
nm
Div. payout ratio (%) 0 0 0
ROAE (%) 10.5 11.4 11.7
ROAA (%) 1.22 1.27 1.29
NIM (%) 3.45 3.44 3.54
Cost to inc. ratio (%) 37.8 37.3 38.0
CAR (%) 12.3 12.0 12.3
NPL ratio (%) 4.16 2.90 2.75
LLR coverage (%) 35.3 47.2 50.6
LDR (%) 123 125 125
P/B (x) 0.86 0.77 0.69
P/E (x) 8.62 7.14 6.20
Dividend yield (%) 0 0 0

Source: Bloomberg, HSC Research estimates

 

Company description

OCB is a mid-sized bank focusing on SMEs and retail clients. A conservative development approach has helped build up a high CAR and a moderate ROE.

 

 

 

 

 

 

the

 

Event: AGM documents released

OCB recently released the AGM agenda, to be held on 22 April. Key items in the documents include the bank’s FY25 business plan and FY24 profit distribution proposal.

FY25 business plan: PBT growth of 33%

OCB targets FY25 PBT of VND5.3tn, up 33% y/y, similar to the preliminary plan targeting growth of above 30% as announced in FY24 AM. Details on the guidance are as follows:

  • Credit growth: 16% and subject to SBV’s credit quota, focusing on retail and SME segments.
  • Funding (deposits, valuable papers, and entrusted funds): 14%.
  • NIM: Stable or slightly improved as management anticipates NIM tightening pressure to continue within the sector.
  • Non-NII: NFI, FX trading, and bad debt recovery will be the focus.
  • NPL ratio (under Cir31/2024): <3%.

We view the plan to be quite ambitious since OCB’s earnings target is 11% above our forecast. That said, under current assumptions, we expect a clear recovery going forward and a solid earnings rebound of 20% in FY25, on a low base. The results should be driven by credit expansion and robust non-NII, in particular bad debt recovery. However, weak bond trading activities, flat NIM, and persisting provisioning pressure make the bank’s target challenging.

Dividend policy: 7% cash and 8% stock

OCB plans to pay a 15% dividend in FY25, which includes a 7% cash dividend and an 8% stock dividend. If approved, this will be the first year OCB pays a cash dividend since listing, with a dividend yield of 6.3%.

(Continued on page 2)

 

 

Figure 1: OCB’s FY25 guidance

VNDbn

FY24A

FY25 plan

Chg. y/y

HSCF

Chg. y/y

%HSCF

Total assets

        280,712

316,779

12.8%

   320,086

14.0%

99%

Total credit

        180,311

208,472

15.6%

   212,767

18.0%

98%

PBT

              4,006

5,338

33.2%

       4,786

19.5%

112%

NPL

3.9%

2.4% (Cir 31)

 

<3% (Cir 31)

 

2.9%

<3% (Cir 31)

 

 

 

ROE

10.4%

 

 

11.6%

 

 

ROA

1.2%

 

 

1.3%

 

 

Note: Per Cir31/2024, the NPL ratio = NPLs/total debts, and key items under NPLs and debts include customer loans, deposits at interbank, and unlisted cbonds  

Source: Company data, HSC Research

 

Maintaining Buy rating

Down 3% YTD, OCB is currently trading at a 1Y rolling forward P/B of 0.75x, 30% and 16% below private banks’ and mid-sized private banks’ average, respectively. The discount makes the stock’s valuation attractive.

 

 

 

 

 

Financial statements and key data

Note: *Excluding short-term investments.

Source: Company, HSC Research estimates

 

Global Disclaimer

Copyright © 2022 Ho Chi Minh Securities Corporation (HSC). All rights reserved.

 

This report has been prepared and issued by HSC or one of its affiliates for distribution in Vietnam and overseas only to professional institutional investors who are our clients and who have agreed to receive our institutional research product.  If you are not such an investor this report is not intended for you, and you should not read or rely upon it.

 

This research report is prepared for general circulation to institutional investors for informational purposes only. It does not have regard to the specific investment objectives, financial situation, or particular needs of any investor who may receive or read it, and investors are cautioned to make independent decisions with regard to their individual financial situations and investment objectives. Nothing in this report constitutes an offer, nor an invitation to make an offer, to buy or to sell any securities or any option, futures contract, or other derivative instrument in any jurisdiction. Nor should it be construed as an advertisement for any financial instruments.

 

Opinions, estimates, and projections expressed in this report represent the views of the author at the date of publication only and are subject to change without notice. They do not necessarily reflect the opinions of HSC. HSC may make other recommendations or comments to other classes of investors which do not agree with the contents of this report. HSC has no obligation to update, amend, or in any way modify this report or otherwise notify a reader thereof in the event that any of the subject matter or any opinion, projection, or estimate contained within it changes or becomes inaccurate. The information herein was obtained from various sources and we do not guarantee its accuracy or completeness.

 

HSC may have proprietary positions in any of the securities mentioned in this report. Research may be considered by HSC when buying or selling proprietary positions or positions held by funds under its management. HSC may trade for its own account as a result of short-term trading suggestions from analysts and may also engage in securities transactions in a manner inconsistent with this report and the opinions expressed therein. Officers of HSC may also have a financial interest in securities mentioned in this report or in related instruments. HSC may have investment banking relationships with or seek to do business with companies named in this report.

 

Investors should note that the prices and availability of financial instruments fluctuate and may rise and fall. Past performance, if any, is no guide to the future.

 

This report remains the property of HSC and is not public information. It may not be copied, reproduced, published, or redistributed in whole or in part by any person for any purpose without the express written permission of HSC. Any party shall be liable to HSC for any cost, loss, or damage incurred by HSC or HSC clients as a result of any breach under this Disclaimer in accordance with law. Furthermore, in the event of any copyright infringement, we reserve the right to pursue legal action against any violation or breach in accordance with Intellectual Property law in Vietnam and other relevant jurisdictions.

 

____________________________________________

 

 

Explanation of Institutional Equity Research Ratings

 

Buy: Expected to rise by more than 20% on an absolute basis in the next 12 months

Add: Expected to rise by between 5% and 20% on an absolute basis in the next 12 months

Hold: Expected to rise or decline by less than 5% on an absolute basis in the next 12 months

Reduce: Expected to decline by between 5% and 20% on an absolute basis in the next 12 months

Sell: Expected to decline by more than 20% on an absolute basis in the next 12 months

 

 

HEAD OFFICE

Level 5 & 6, AB Tower

76 Le Lai, District 1, HCMC

T: (+84 28) 3823 3299

F: (+84 28) 3823 3301

 

HANOI OFFICE

Level 2, Cornerstone building

16 Phan Chu Trinh, Hoan Kiem District

T: (+84 24) 3933 4693

F: (+84 24) 3933 4822

 

E: [email protected]   W: www.hsc.com.vn