Bao Viet shares at what cost?

A survey shows that the price of Bao Viet shares to be offered at the share auction slated for May 31 will not be very high. Though enjoying advantages in trademark, network, safety ratio, land use rights, Bao Viet still carries disadvantages of a State owned enterprise.

Investors said that the starting price of VND30,500/share Bao Viet has set proves to be a suitable level, if considering Bao Viet’s business performance and comparing the prices of shares of other insurers. Bao Viet’s total assets, as appraised by Credit Suisse, are nearly $1,900bil ($1.2bil).

Analysts said that the starting price of VND30,500 was set because of several reasons. Bao Viet’s business performance has not been very good, so the share price should not be set at an overly high level. Moreover, the insurer should learn lessons from the auctions of Cadivi, PVGas, and Thac Mo shares. At those auctions, investors initially offered very high price levels, but they then gave up on the auctions.

According to the prospectus, the post tax profit of the insurer is VND524,007bil ($32,750mil), meaning that the EPS (earnings per share) will be VND770.59.

Supposing that the average price of Bao Viet shares after the auction is VND50,000/share, the P/E index would be 64.89, if the share price is VND70,000/share, the P/E would be 90.84, and if the price is VND100,000, the P/E would be 129.77. The starting price of VND30,500/share proves to be reasonable, analysts say.


Though enjoying advantages in trademark, network, safety ratio, land use rights, Bao Viet still bears disadvantages of a State owned enterprise.

The disadvantages lie in the competitiveness in the fields of operation mechanism, ownership capital, human resources, products. While the business performance and financial indexes prove to be normal, the tentative dividends, however, prove to be not so attractive.

An investor said that this proves to be a bad business performance for such a big insurer like Bao Viet, which gained only VND318bil ($19.87mil) in post tax profit. The growth rate Bao Viet has witnessed in the last time proves to be lower than that obtained by other insurers, like BMI, VASS, PVI, PJICO and VNR.

Investors are forecast to not try to buy Bao Viet shares at any cost, because they will have many other choices when other big groups make IPO. They will only buy Bao Viet shares at ‘acceptable’ prices which can ensure profit. If they buy Bao Viet shares at abnormally high prices, they will have to ignore many other opportunities to be brought about by Vietcombank and BIDV’s IPOs.

It is expected that several investors will offer the auctioning prices of VND33-35,000/share. Investors who think that Bao Viet will obtain the growth rate of 4-5 times higher than in 2006, i.e. the post tax profit of VND1,200-1,600bil, will offer VND40-60,000. The most optimistic, who still consider Bao Viet the No 1 insurer in Vietnam, will pay VND80-100,000.

Source: VNE