ACB_Tracking_TP 32,686 VND_Upside 7.5%_Stable Growth_BSC Company Update

Valuation
We recommend TRACKING with ACB stock with a target price of VND 32,686/share, upside 7.5% with P/B method = 1.8x (current industry average = 1.6x). We apply P/B = 1.8x because ACB is a good stock with high profitability, a good choice to invest in bank stocks and actively recovering debt of G6 group in 2019.

Forecast of business results 2019.
BSC forecasts that ACB will record TOI and PBT respectively at VND 5,464 billion (+ 12% yoy) and VND 1,393 billion (+ 14.8% yoy) assuming (1) credit growth of 14%, ( 2) NPL = 1.42%, bad debt coverage ratio = 100%, (3) NIM slightly decreased, down to 3.08%, (4) CIR = 62%, (5) social work expenses at VND 550 billion.

Catalyst
(1) Boosting debt recovery of G6 group. (In 2018, VND 1,800 billion was collected).
Investment Risk
(1) The pressure of growth raises the NPL, (2) conflict of interests among major shareholders.

Business update (Refer to page 2 for details)
2018 business results. In 2018, ACB recorded TOI and PBT at VND 14,033 billion (+ 22.7% yoy) and VND 6,389 billion (+ 141% yoy).
Net interest income + 22.53% yoy (accounting for 74% TOI) due to (1) credit growth in 2018 reached 15.04%, customer loans + 15.14% yoy, mobilization + 11.9% yoy, (2) NIM 2018 = 3.55% (+11 bps).
Non-interest income increased sharply. Net profit from service activities + 26.02% yoy, other income increased sharply to VND 1,815 billion (+ 104% yoy).
Improved asset quality. NPL = 0.73% (industry average of 1.65%). The ratio of bad debt by the end of 2018 reached 152%, higher than the current industry average (79.68%).