[BSC Vietnam] Margin Shaking On The Double Twelfth (EIB) 12.12.2017 (DELAYED)

|Includes: VanEck Vectors Vietnam ETF (VNM)

Summary

Do you feel your heart pounding out of your chest today? Vnindex had a wild ride from -18 point to +9.8 point today.

EIB (VND 12.45, + 1.6%, market cap of USD 700 mil, P/B of 1.1). There is a rumor that VCB will divest from EIB early next year which have some impact.

Margin shaking on the Double twelfth. What happen in the Vietnam listed stock market today remind me of the words “双十二” (mean Double 12 in mandarin). margin lending of VN market have reachedCeiling.

The most recent pullback. Since 2014, Vietnam market had 8 clear pullbacks. On average the market move backward of 10.58% for around 17 trading days.

Dear Valued Clients and partners,

·         Do you feel your heart pounding out of your chest today? Vnindex had a wild ride from -18 point to +9.8 point today. That turbulence make the VN30 futures’ trading value staying at a record high of USD 110.5 million. Energy save the market with +4.34% (despite the anticorruption news last week), followed by Consumer staples (+2%), utilities (+1.23%). The laggers are Real estate (-0.9%), Material (-0.8%).

Today’s Markets:

·         Indexes : VN-Index 1.07%, HNX-Index -0.78%,  Upcom -0.39%

·         Active : HOSE: HBC, TCH, PVD, SAB.   HNX: ACB, SHB, PVI, PVS.

·         Foreigner, Buy : VNM, GAS, CII, VIC, SSI.  Sell: NVL, SAB, DIG, KBC, DHG.

·         Notice stocks : FPT, KBC, BVH, DHG, GMD, PC1, PVT, DAG, ACB, PVS, DVN, QNS

·         Trading volume : ~ 349.4 million shares

·         Trading value : VND 7428.8 bil ~ 327.26 USD mil

·         Foreigner transaction Net: -5.6 mil USD Sell 37.1 USD million and Buy 31.5 USD million

·         Derivative market Trading value: USD 110.5 million; VN30F1712 @ 905; VN30F1801 @ 907; VN30F1803 @ 934; VN30F1806 @ 950

Corporate update:

 

·         EIB (VND 12.45, + 1.6%, market cap of USD 700 mil, P/B of 1.1). There is a rumor that VCB will divest from EIB early next year which have some impact to EIB stock lately. Our analyst have just update on EIB and recommence that Investors should be concerned about EIB’s asset quality and the progress of handling bad debt.

Bad debt declined in absolute terms, however, the rate of decline was slow. Total non-performing loans reached VND 2,350 billion at the end of Q3/2017, bad debt ratio was 2.46%, still high compared to listed banks. The face value of VAMC bonds was VND 6,303 billion, the net value of VAMC bonds after deducting the provision was VND 4,745 billion. Including debt sold to VAMC, bad debt ratio increased to 7.08%. Accumulated 9M2017, the bank recovered VND 145 billion of bad debt processed, 3.3 times higher than the same period, however, still lower than the size of bad debt at EIB.  We expect the resolution of the 42th National Assembly on the handling of bad debts and collateral of credit institutions will actively support the EIB. The current question are leadership and the quality of human resources involved in dealing with bad debt.

Low provision for bad debt and VAMC bonds. EIB’s bad debt coverage ratio was one of the lowest among listed banks, reaching 41% at the end of September 2017, just above STB (19%). The provision of VAMC only accounted for 25% of their par value, while many banks are going to/expected to close the VAMC bond outstanding in 2018. We believe that in the coming time, EIB should continue to focus on handling bad debt and provisioning and improving the core business activity.

 

Comments:  

 

·         Margin shaking on the Double twelfthWhat happen in the Vietnam listed stock market today remind me of the words “双十二” (mean Double 12 in mandarin). The 12th of Dec is some kind of cyber Monday for Chinese market when buyers hunt for bargain from online shopping web. Last week we mentioned that the overall margin lending of VN market have reached to the ceiling for few weeks. Hence, the brokers will likely to cool down the margin lending portfolio toward yearend. Our source told us that total margin is going down in top lender but still stand at high level which means that more shaking margin activities are expected in coming days.

·         The most recent pullback. Since 2014, Vietnam market had 8 clear pullbacks and worth to compare to recent fall. The question is the same as last time “How Long and How Low” (BSC report 2 years ago)​. On average the market move backward of 10.58% for around 17 trading days. People blame Margin cutting & Anticorruption news and rumors for the drop of stocks this time. For more detail in our report here (Vietnamese)

Table of the day: Vietnam market reaction during significant pullbacks

Start End Events Days P/E Vnindex Vnindex
4/14/2014 5/15/2014 East Sea incident 24 12.9 -14.10%
11/14/2014 12/16/2014 Oil Price drop 23 13.2 -14.50%
3/10/2015 4/2/2015 Circular 36 (Margin) 18 12.2 -9.00%
7/17/2015 8/26/2015 China RMB drop 29 10.7 -18.70%
11/20/2015 10/12/2015 Foreigner strong Netsell 8 11.1 -5.20%
4/1/2016 22/1/2016 China Stock drop 15 11.9 -10.95%
20/7/2016 5/8/2016 Brexit 14 16.3 -6.43%
4/12/2017 ? Margin & Anticorruption 5? 18.5 -5.73%
Average     17 13.4 -10.58%

Source: BSC

 

 

Cheers

 

Long Tran

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