INVESTMENT THESIS

Expectations to complete the restructuring project: Reducing the pressure of provision costs, releasing earning assets, and the revenue from sales of collateral for outstanding bad debts are 3 factors that help improve future income of STB.
Consistent business strategy helps increase income sharply. The bank’s PBT is expected to increase by 56% in 2023 thanks to (1) net interest income continuing to improve by 15% (2) service income increasing by 17% and (3) falling provision expenses due to reduced provisioning pressure on restructuring debt.

RECOMMENDATION
With the expectation that STB will successfully restructure and complete VAMC bad debt settlement in 2023, business performance will improve in both credit and service aspects, we value STB at VND 40,000/share and recommend “Buy” STB with an expected 1-year return of 53% compared to the closing price on February 3, 2023. The recommended price does not include expectations related to the proceeds from the sale of collateral for VAMC bonds.
Although a successful restructuring is the main expectation, we believe that it is prudent to consider the new governance factor in considering the bank’s prospects. The successful transfer of 32.5% shares is still a mystery and represents a major turning point for the bank’s business over the long-term.