VCB [OUTPERFORM +16.5%] - Well positioned for growth when economy recovers - Update

- We raise our target price (TP) for VCB by 5.5% to VND104,600/share but downgrade our rating from BUY to OUTPERFORM as the bank’s share price has increased ~15% in the last three months.
- We keep our aggregate 2023-2027F NPAT-MI unchanged (with respective changes of 3.3%/2.1%/-1.8%/1.6%/-1.5% in 2023/24/25/26/27F). Our higher TP is mainly due to (1) lowering our assumption for VCB’s cost of equity from 13.4% to 13.3% as a result of an updated beta and (2) increasing our assumption for VCB’s target P/B from 3.0x to 3.3x.
- We believe VCB should trade at a higher valuation relative to peers as (1) the gap between VCB’s asset quality and that of its peers is getting wider and (2) VCB’s superior asset quality and LLR cushion leave it well positioned for growth when the economy recovers.