Định giá cổ phiếu ngân hàng thương mại qua trường hợp ngân hàng sacombank

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS DANG QUOC HIEP VALUING STOCKS OF COMMERCIAL JOINT STOCK BANKS – THE CASE OF SACOMBANK MASTER OF BUSINESS ADMINISTRATION THESIS Hanoi – 2010 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS DANG QUOC HIEP VALUING STOCKS OF COMMERCIAL JOINT STOCK BANKS – THE CASE OF SACOMBANK Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr Chu Thanh Ph.D Candidate Ha Nguyen Hanoi – 2010 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) TABLE OF CONTENTS ACKNOWLEDGEMENTS i ABSTRACT ii TÓM TẮT iv List of tables viii List of figures viii List of abbreviations ix INTRODUCTION CHAPTER 1: COMMERCIAL JOINT STOCK BANKS: INTRODUCTION TO VALUATION OF STOCK 1.1 The introduction of commercial joint stock banks 1.1.1 Commercial bank- an important intermediary financial institution .5 1.1.1.1 The definition of commercial banks 1.1.1.2 The financial intermediary role of commercial banks 1.1.2 The organization and operation of commercial banks 1.1.2.1 Organization and management of commercial banks 1.1.2.2 Capital of commercial joint stock banks 1.1.2.3 Some basic criteria for evaluating the operation efficiency of commercial joint stock banks 13 1.2 Legal bases and stock valuation methods 15 1.2.1 Concept of stocks and valuing stocks 15 1.2.1.1 Concept of stocks 15 1.2.1.2 The concept of valuing stocks 16 1.2.2 The legal bases for valuing stocks in Vietnam 16 1.2.2.1 Some regulations of stock valuation 18 1.2.2.2 Regulations of valuation methods 19 1.2.2.3 The regulations of land usage right 23 1.2.2.4 The regulations of specifying the advantage values .24 1.2.3 The stock valuation methods: 25 1.2.3.1 The method of dividend discount model (DDM model) 28 1.2.3.2 The discounted cash flow method (DCF) 36 1.2.3.3 The valuation method based on P/E 39 1.2.3.4 The assessment method based on the value of net assets .41 1.2.3.5 The valuation method based on P/B 42 1.2.3.6 Methods to assess banking stock 43 CHAPTER 2: ANALYSIS OF COMMERCIAL BANK STOCK VALUATION – THE CASE OF SACOMBANK 45 2.1 The establishment and development of commercial joint stock banks in Vietnam 45 2.2 General introduction of Sacombank: 46 2.2.1 Sacombank stock: 46 vi Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) 2.2.2 Some general features of Sacombank: 48 2.2.2.1 Operational cirteria of Sacombank during 2005-2009 49 2.2.3 Asia banking sector overview and forecast: 51 2.3 Valuation analysis on the stock STB 53 2.3.1 Valuing the stock STB with DDM method 53 2.3.2 Valuing the stock STB with the method of P/E coefficient: 56 2.3.3 Valuing STB with the method of net value of assets: 57 2.3.4 Analyzing the P/B coefficient of STB as of year end 2009: 58 2.4 Evaluating the results of valuing the stock STB 59 2.6 Advantages and difficulties in valuing stocks of Vietnamese commercial joint stock banks 60 2.6.1 Advantages in valuing stocks: 60 2.6.2 Difficulties in valuing stocks 61 2.6.2.1 Difficulties from commercial banks themselves 61 2.6.2.2 Difficulties from the business environment 62 2.6.2.3 The lack of understanding of investors 66 2.7 Major lessons taken out of Sacombank 67 CHAPTER 3: SOLUTIONS & RECOMMENDATIONS TO ENHANCE/ IMPROVE STOCK VALUATION OF COMMERCIAL BANKS IN VIETNAM 71 3.1 Implications for other banks 71 3.2 Recommendations to enhance the quality of banking stock valuation 74 3.2.1 Recommendations to commercial banks: 74 3.2.1.1 Developing business strategies and long term financial plans 74 3.2.1.2 Complying with rules and accounting standards 75 3.2.1.3 Setting up expertise departments for valuing stocks 75 3.2.1.4 Performing the information announcement 75 3.2.2 Recommendations to the government 76 3.2.2.1 Improving the legal framework for valuation and system of related legal documents 76 3.2.2.2 Methods related to the market information 80 3.2.3 Recommendations to investors 83 CONCLUSION 85 LIST OF REFERENCES 87 Appendix 1: Country Default Spreads and Risk Premiums 90 Appendix 2: Asia banking sector peer comparison 94 vii Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) List of tables Item Table Description 2.1 Operation criteria of Sacombank in the perio 2.2 Income Statement of Sacombank throughout 2.3 Key financial ratios of Sacombank througho 2.4 Dividend payout history of Sacombank in re 2.5 ROE of Sacombank in the period of 2005-20 2.6 Balance sheet of Sacombank in the quarter List of figures Item Figure Description 1.1 The organization of a small bank 1.2 The organization of a large bank 1.3 Valuation Models 1.4 SML – The Security Market Line 2.1 The price movement of stock STB from the q 25/04/2009 2.2 Asia Banking Forecast Q2/2010 2.3 Sacombank Beta viii Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) List of abbreviations VN-Index Vietnam Index GDP Gross Domestic Products WTO World Trade Organization IPO Initial public offering P/B Price to book P/E Price to earning STB Sacombank ROA Return on asset ROE Return on equity DDM Dividend discount model DCF Discounted cash flow FCF Free Cash Flow FCFE Free Cash Flow to Equity FCFF Free Cash Flow to Firm NAV Net Asset Value EPS Earning per share SML Security Market Line WACC Weighted average cost of capital CAPM Capital Asset Pricing Model HOSE Hochiminh Stock Exchange HASTC Hanoi Stock Trading Center OTC Over the counter ix Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) INTRODUCTION The emergency and objectives of the research The reform of Vietnam has been taking place totally and deeply in many fields The event that Vietnam became the official member of the World Trade Organization (WTO) put an important mark in the integrating process into the world economy Vietnam’s economy has grown fast, in the last five years GDP of Vietnam increased by nearly 7.5% on average In that situation, the process of economic monetarilization will also take place deeper and larger, demands for financial and banking services of enterprises and especially of inhabitants will increase dramatically In recent years, the average growth rate of banking sector is 22%, times faster than the growth of GDP Besides, there is a market share transition among groups of banks, in which the market shares of commercial banks group will increase substantially After years in operation, Vietnam’s securities market has gained certain remarkable achievements; the highest VN-index reached 1070 points, then fell to the trough of 235 points The development of the securities market has made the stock valuation become necessary The stock valuation has helped small investors in Vietnam become more active, avoid the phenomenon of transacting with the “gregarious” psychology and avoid bearing risks For enterprises who conduct the initial public offering (IPO), the valuation of referential stocks for the first transaction day of the IPO firms is a necessary and extremely sensitive work This valuation may lead to success or failure of this public offering In the banking sector, a number of state-owned banks are preparing for the equatization and offering securities to the public In the mean time, there are only Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) two joint stock banks listing their stocks in the centered securities market, those are ACB and Sacombank With the objective to contribute to finding a suitable stock valuation methods for stock valuation of listed commercial banks, and from that some methods for enhancing stock valuation in the Vietnamese securities market can be recommended, I have chosen the topic “Valuing stocks of commercial joint stock banks- the case of Sacombank” The objectives of the research are to: - Present an overview of the commercial bank operations & stock evaluation methods - Provide an analysis of the STB stock with various methods - Recommend improvement plans to enhance the valuation of bank stocks Subject and scope The thesis concentrates on the valuation methods for stocks of commercial joint stock banks In which, it will specifically value the stock of Saigon commercial joint stock bank -Sacombank, one of the two banks which are listing their stocks in the listed securities market Research methodology: The author adopts both primary and secondary research methods to domestic and foreign material sources to find out basic theories about stock valuation methods, meanwhile collecting data through prospectus, financial statement, analysis reports of Sacombank…Using the systematical, statistical, analytical methods to analyze all collected data Combining studied theories, domestic legal bases with all collected results to give judgments on the application capability of valuation methods for stocks of the Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) banking sector, and to recommend some methods to enhance the stock valuation in the Vietnamese securities market at the same time The structure of the thesis The thesis is presented in three chapters in which the first chapter will give basic definitions and most general theories about the researched problem of this thesis The second chapter will apply each method presented in the first chapter one after the other to conduct the valuation of Sacombank’s stocks and give judgments about the application capability of the stock valuation methods The third chapter will give some recommendations about applying some valuation methods to evaluate stocks of the banking sector, besides, give some recommendations to enhance the quality of stock valuation in the Vietnamese securities market Chapter 1: Commercial joint stock banks: Introduction to Valuation of Stock The content of this chapter is to concentrate on giving a general overview about the system of commercial banks, legality of commercial joint stock banks in Vietnam and basic theories about stock valuation Chapter 2: Valuing stock of commercial banks – the case of Sacombank This chapter concentrates on introducing the establishment, development and operation of Vietnamese commercial joint stock banks in general and Sacombank in particular This chapter also collects preliminarily the price changes of the two banking stocks which are now being listed and then conduct applying the valuation methods in the first chapter to value the stock STB Finally, chapter will evaluate the application capability of above valuation methods in valuing stocks of banks and give out some advantages and difficulties in valuing stocks of commercial joint stock banks currently Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) Chapter 3: Some recommendations and solutions to assessing stocks of Vietnamese commercial joint stock banks This chapter concentrates on recommendations and solutions to assessing stocks of Vietnamese commercial joint stock banks Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) 12 Nguyen Minh Tri, High business Efficiency in the early months and the plan of increasing chartered capitals of commercial joint stock banks, “Money Finance Market No 12 (234) 15/06/2007 13 MA Pham Ngoc Lan, Equitization and Increase in chartered capitals of commercial banks – Money Finance Market No3+4 (249+250) 01/02/2008 14 Le Ba Hoang Quang, Banks’ stocks through some financial criteria, Securities Investment No 49 (521) 09/08/2007 15 Decree 187/2004/NĐ- CP issued on 16/11/2004 about transferring some State owned Enterprises to joint stock companies 16 Circular No 126/2004/TT-BTC of Ministry of Finance issued on 24/12/2004, instructing how to perform decree 187 17 Circular No 95/2006/TT-BTC amending, supplementing the Circular No 126/2004/TT-BTC instructing how to perform the decree 187 18 Decree 109/2007/NĐ- CP issued on 26/06/2007 about transferring some State owned Enterprises to joint stock companies 19 Circular No 146/2007/TT-BTC of Ministry of Finance issued on 06/12/2007, instructing how to perform the decree 109 20 Tran Viet Thang, Dinh Nhu Duc Thien, Report on Analyzing stocks of Banking sector – EPS Research 21 Report on Analyzing Vietnamese Securities Market Quarter II/2007, Viet Dragon Securities Company, VDSC 22 Report on Overview of Vietnamese listed stock market Quarter IV/2007, Bien Viet Securities company 23 Vietnam, Economy and Securities market in months of early 2007, Bao Viet Securities Company 88 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) 24 Annual Report 2006, 2007 of Sacombank 25 Announcement Statement 2006 of Sacombank 26 Financial Report Quarter I/2008 of Sacombank 27 Wayne Lonergem , The valuation of business, share and other equity, 1994 28 Richand A Brealey, Stewant C Myers , Principles of corporate finance, The McGraw Hill Companies, Inc 1996 29 Jack Clark Francis , Management of Investment , McGraw Hill, Inc 1993 30 Banking Sector Report, Vinacapital 2006 31 The article “Can the model CAPM be used in Vietnam?” on the website: http://saga.vn 32 “CAPM and the Characteristic Line” http://www.investopedia.com 33 Aswath Damodaran, Valuation A big future, http://www.damodaran.com 34 http://www.sbv.gov.vn 35 http://www.sacombank.com.vn 36 http://www.vndirect.com.vn 37 http://www.vse.org.vn 38 http://www.vnba.org.vn 39 http://www.dongasecurities.com.vn 40 http://www.cafeF.vn 41 http://www.dautuchungkhoan.com 42 http:// www.cophieu68.com 89 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) Appendix 1: Country Default Spreads and Risk Premiums Last updated: January 2010 This table summarizes the latest bond ratings and appropriate default spreads for different countries While you can use these numbers as rough estimates of country risk premiums, you may want to modify the premium to reflect the additional risk of equity markets To estimate the long term country risk premium, I start with the country rating (from Moody's: www.moodys.com) and estimate the default spread for that rating (based upon traded country bonds) over a default free government bond rate This becomes a measure of the added country risk premium for that country I add this default spread to the historical risk premium for a mature equity market (estimated from US historical data) to estimate the total risk premium In the short term especially, the equity country risk premium is likely to be greater than the country's default spread You can estimate an adjusted country risk premium by multiplying the default spread by the relative equity market volatility for that market (Std dev in country equity market/Std dev in country bond) I have used the emerging market average of 1.5 (equity markets are about 1.5 times more volatile than bond markets) to estimate country risk premium I have added this to the historical premium for mature markets of about 4.5% to get the total risk premium Country Albania Argentina Armenia Australia Austria [1] Azerbaijan Bahamas Bahrain Barbados 90 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) Belarus Belgium [1] Belize Bermuda Bolivia Bosnia and Herzegovina Botswana Brazil Bulgaria Cambodia Canada Cayman Islands Chile China Colombia Costa Rica Croatia Cuba Cyprus [1] Czech Republic Denmark Dominican Republic Ecuador Egypt El Salvador Estonia Fiji Islands Finland [1] France [1] Germany [1] Greece [1] Guatemala 91 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) Honduras Hong Kong Hungary Iceland India Indonesia Ireland [1] Isle of Man Israel Italy [1] Jamaica Japan Jordan Kazakhstan Korea Kuwait Latvia Lebanon Lithuania Luxembourg [1] Macao Malaysia Malta [1] Mauritius Mexico Moldova Mongolia Montenegro Morocco Netherlands [1] New Zealand Nicaragua Norway Oman Pakistan Panama Papua New Guinea 92 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) Paraguay Peru Philippines Poland Portugal [1] Qatar Romania Russia Saudi Arabia Singapore Slovakia Slovenia [1] South Africa Spain [1] St Vincent & the Grenadines Suriname Sweden Switzerland Taiwan Thailand Trinidad and Tobago Tunisia Turkey Turkmenistan Ukraine United Arab Emirates United Kingdom United States of America Uruguay Venezuela Vietnam Aswath Damodaran, pages.stern.nyu.edu 93 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) Appendix 2: Asia banking sector peer comparison Source: Reuters Industry Report Banks - Asia Report - Altman Z-Score1 - Last updated on 2010 Company AVERAGE Bank of China Limited 11 Bank of China China Construction Bank Corporation Industrial and Commercial Bank of China Industrial and Commercial Bank of China China Minsheng Banking Corporation Ltd Shenzhen Development Bank Co., Ltd Bank of Communications Co Ltd Bank of Communications Co., Ltd China Merchants Bank Co., Ltd China CITIC Bank Corporation Limited 12 Shanghai Pudong Development Bank Co Ltd 13 Bank of Beijing Co., Ltd 14 Hua Xia Bank Co., Limited 15 Industrial Bank Co., Ltd 16 Bank of Nanjing Co., Ltd 17 Bank of Ningbo Co., Ltd Dah Sing Financial Holdings Ltd 10 18 94 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) 19 Chong Hing Bank Limited Fubon Bank (Hong Kong) 20 Limited Industrial & Comm'l Bank 21 of China (Asia) BOC Hong Kong 22 (Holdings) Ltd The Bank of East Asia 23 Limited Dah Sing Banking Group 24 Limited 25 Wing Hang Bank, Limited China CITIC Bank 26 Corporation Limited 27 Hang Seng Bank China Construction Bank 28 Corporation China Merchants Bank Co., 29 Ltd CITIC International 30 Financial Holdings 31 Wing Lung Bank Limited PT Bank Victoria 32 International Tbk 33 PT Bank Bukopin Tbk PT Bank Himpunan 34 Saudara 1906 Tbk PT Bank Tabungan 35 Pensiunan Nasional Tbk 36 PT Bank Mega Tbk PT Bank Artha Graha 37 Internasional Tbk PT Bank Danamon 38 Indonesia Tbk PT Bank Mandiri (Persero) 39 Tbk 40 PT Bank Permata Tbk PT Bank Rakyat Indonesia 41 (Persero) Tbk 42 PT Bank Central Asia Tbk 43 PT Bank Bumi Arta Tbk 95 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) 44 PT Bank Lippo Tbk PT Bank Nusantara 45 Parahyangan Tbk 46 PT Bank Niaga Tbk PT Bank Ekonomi Raharja 47 Tbk 48 PT Bank Swadesi Tbk PT Bank Bumiputera 49 Indonesia Tbk PT Bank Capital Indonesia 50 Tbk 51 PT Bank UOB Buana Tbk PT Bank Negara Indonesia 52 (Persero) Tbk 53 PT Bank NISP Tbk 54 PT Bank Pan Indonesia Tbk PT Bank Windu Kentjana 55 International Tbk 56 PT Bank Kesawan Tbk 57 PT Bank Century Tbk PT Bank Internasional 58 Indonesia Tbk PT Bank Eksekutif 59 Internasional Tbk PT Bank Mayapada 60 Internasional Tbk 61 PT Bank Agroniaga Tbk 62 Allahabad Bank 63 Syndicate Bank Ltd 64 Dena Bank 65 Indian Overseas Bank 66 State Bank Of Travancore 67 Oriental Bank of Commerce 68 Vijaya Bank 96 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) 69 Canara Bank 70 Indian Bank 71 Central Bank Of India 72 Union Bank of India 73 Andhra Bank 74 Bank of Maharashtra State Bank of Bikaner and 75 Jaipur 76 Bank of Baroda 77 Corporation Bank 78 South Indian Bank Limited 79 Punjab National Bank 80 Bank of India 81 The Federal Bank Limited 82 IDBI Bank Limited 83 Karnataka Bank Limited 84 City Union Bank Limited 85 State Bank of India 86 UCO Bank Limited Jammu & Kashmir Bank 87 Limited 88 Karur Vysya Bank Limited The Dhanalakshmi Bank 89 Limited 90 State Bank of Mysore 91 Bank of Rajasthan Limited 92 ING Vysya Bank Limited 93 Lakshmi Vilas Bank Ltd 97 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) Kotak Mahindra Bank 94 Limited 95 Yes Bank Limited 96 ICICI Bank Limited 97 Axis Bank Ltd 98 HDFC Bank Limited 99 IndusInd Bank Limited Development Credit Bank 100 Limited Centurion Bank of Punjab 101 Limited ICICI Bank Limited 102 (Parent) Kotak Mahindra Bank 103 Limited (Parent) Punjab National Bank 104 (Parent) Philippine Bank Of 105 Communications RCBC-Rizal Commercial 106 Banking Corp 107 Security Bank Corporation UnionBank of the 108 Philippines AsiaTrust Development 109 Bank, Inc Metropolitan Bank & Trust 110 Company 111 Philippine Savings Bank Bank of the Philippine 112 Islands 113 China Banking Corporation 114 Philippine National Bank Banco de Oro Universal 115 Bank 116 Philippine Trust Company Chinatrust (Phils.) 117 Commercial Bank Corp 118 Citystate Savings Bank, Inc 98 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) 119 122 Allied Banking Corporation Export and Industry Bank, Inc Forum Pacific Inc Oversea-Chinese Banking Corp Limited 123 DBS Group Holdings Ltd 124 United Overseas Bank Ltd 125 129 Thanachart Capital PCL Kiatnakin Bank Public Company Limited Bangkok First Investment and Trust PCL ACL Bank Public Company Limited TISCO Bank Public Company Limited 130 KASIKORNBANK PCL 131 Bangkok Bank PCL 132 Krung Thai Bank PCL Siam Commercial Bank PCL 120 121 126 127 128 133 136 Bank of Ayudhya Public Company Limited BankThai Public Company Limited Siam City Bank Public Company Limited 137 TMB Bank PCL 138 139 Taiwan Business Bank Taichung Commercial Bank Co , Ltd 140 Taiwan Cooperative Bank 141 Bank of Kaohsiung, Ltd 134 135 142 143 144 China Development Financial Holding Corp Sinopac Financial Holdings Company Ltd King's Town Bank 99 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) Chang Hwa Commercial 145 Bank, Ltd 146 Cosmos Bank, Taiwan 147 EnTie Commercial Bank Far Eastern International 148 Bank First Capital Commercial 149 Bank 150 Ta Chong Bank Ltd 151 Union Bank of Taiwan 100 Create PDF files without this message by purchasing novaPDF printer (http://www.novapdf.com) ... criteria of Sacombank in the perio 2.2 Income Statement of Sacombank throughout 2.3 Key financial ratios of Sacombank througho 2.4 Dividend payout history of Sacombank in re 2.5 ROE of Sacombank. .. OF SACOMBANK 45 2.1 The establishment and development of commercial joint stock banks in Vietnam 45 2.2 General introduction of Sacombank: 46 2.2.1 Sacombank. .. novaPDF printer (http://www.novapdf.com) 2.2.2 Some general features of Sacombank: 48 2.2.2.1 Operational cirteria of Sacombank during 2005-2009 49 2.2.3 Asia banking sector overview and