2020 not a good year for bank stock debuts

January 04, 2021 - 07:33

Debuting on a new bourse may give a boost to the stock price, but the market reactions were not quite positive for the banks doing so in 2020.


A Việt Nam International Joint Stock Commercial Bank (VIB) office. — Photo vib.com.vn

HÀ NỘI — Debuting on a new bourse may give a boost to the stock price, but the market reactions were not quite positive for the banks doing so in 2020.

Liên Việt Post Joint Stock Commercial Bank (LienVietPostBank, HoSE: LPB) and Việt Nam International Commercial Joint Stock Bank (VIB, HoSE: VIB) in early November 2020 moved their shares from UPCoM to the Hồ Chí Minh Stock Exchange (HoSE).

Both banks saw their shares dive from UPCoM-ending levels on HoSE-debut days before struggling to rebound and end 2020 at UPCoM-ending prices.

LienVietPostBank had its last trading day on UPCoM at VNĐ12,500 apiece on October 23 and finished its HoSE-debut at VNĐ11,230 apiece on November 9. Its shares then ended 2020 at VNĐ12,400 apiece.

VIB closed its UPCoM-trading at VNĐ32,800 apiece on October 29. The bank started trading on HoSE on November 10 and its shares dropped to VNĐ27,330 apiece at the end of the day. VIB shares finished 2020 at VNĐ32,400 apiece.

According to business insiders, the moves of the two stocks are only short-term stories. Both banks have their own competitive advantages but it will take them a long time to realise those advantages, improve the performances and reflect the improvements in the share prices.

One of the most remarkable bourse-switching deals in 2020 was the move of Asia Commercial Joint Stock Bank (ACB, HoSE: ACB) as it cancelled the listing on the Hà Nội Stock Exchange and moved to HoSE on December 9.

ACB ended its listing on HNX at VNĐ27,300 apiece. Its stock surged to VNĐ28,500 apiece on the debut day but then fell back to VNĐ28,100 on December 31.

Dairy boost

Mộc Châu Milk debuted on the Unlisted Public Company Market (UPCoM) with code MCM on December 18.

After the debut, the dairy producer’s shares surged total 92.5 per cent in seven trading days to VNĐ78,000 apiece before declining to VNĐ72,200 apiece on the last day of 2020.

During the rally, the shares were often sold out while the demand of buyers outperformed the supply.

Mộc Châu Milk’ shares had been a “hot” commodity before its UPCoM debut as some investors were willing to pay VNĐ60,000 for a share on the Over-the-Counter (OTC) market.

The surge of the company’s shares resulted from the market expectations that its business would be robust in the near future and the largest dairy producer Vinamilk (HoSE: VNM) will soon raise its ownership in the firm, tinnhanhchungkhoan.vn reported.

The parent firm Vilico owns 51 per cent of Mộc Châu Milk. GTNFoods owns 74 per cent of Vilico, while Vinamilk possesses 75.3 per cent of GTNFoods. On September 30, 2020, Vinamilk had a 28.61 per cent indirect stake at Mộc Châu Milk.

Mộc Châu Milk recorded average earnings in 2017-19 with revenues ranging from VNĐ2.46 trillion to VNĐ2.56 trillion and net profit falling from VNĐ217 billion in 2017 to VNĐ181 billion in 2018 and VNĐ167 billion in 2019.

After being acquired by Vinamilk, the results at Mộc Châu Milk improved sharply. In July-September, revenue was up 13.7 per cent on-year to nearly VNĐ775 billion and post-tax profit soared 113 per cent on-year to VNĐ102.4 billion.

After nine months, total revenue at Mộc Châu Milk gained 73.7 per cent on-year to VNĐ2.14 trillion and post-tax profit jumped 132 per cent on-year to VNĐ208 billion.

But for some analysts, the shares of Mộc Châu Milk are slightly overrated. The price-to-earnings per share (P/E) ratio at the northern dairy company was 22.21 at September-end and the price-to-book (P/B) ratio was 4 – nearly level to those of Vinamilk (20.66 and 7.2) while the size and capacity of Mộc Châu Milk were not comparable to Vinamilk’s at the moment.

Those figures may suggest that Mộc Châu Milk’s shares will soon cool down in the near future and return to a more reasonable price level. — VNS