CIMB (1023) : Affin Hwang Research maintains Reduce on CIMB
KUALA LUMPUR: Affin Hwang Research has maintained its Reduce rating on CIMB with a target price of RM5.76 based on an P/BV target multiple of 1.22 times.
"We continue to see downside risks to earnings, in particular persistent headwinds from Indonesia given a more likely increase in NPLs in 4Q14 weakening loan growth and NIMpressure and contraction in non-interest income.
"On CIMB’s outlook, we remain cautious on the proposed merger with RHB Capital and MBSB owing to the risk of high merger cost, challenges in value creation, asset quality issues as well as integration risks," it said in a note on Wednesday.
The research house said CIMB Group’s 9M14 core net profit of RM2.890bil was hit by high allowances, caused by deterioration in CIMB Niaga’s asset quality. Excluding Indonesia, group earnings grew instead by 6% on-year. Results were within our expectations, but below consensus, it added.
The annualized results were within Affin Hwang’s expectations but 11% below consensus. There were no dividends in 3Q14 but the group’s dividend policy remains at a 40-60% payout ratio.
http://www.thestar.com.my
KUALA LUMPUR: Affin Hwang Research has maintained its Reduce rating on CIMB with a target price of RM5.76 based on an P/BV target multiple of 1.22 times.
"We continue to see downside risks to earnings, in particular persistent headwinds from Indonesia given a more likely increase in NPLs in 4Q14 weakening loan growth and NIMpressure and contraction in non-interest income.
"On CIMB’s outlook, we remain cautious on the proposed merger with RHB Capital and MBSB owing to the risk of high merger cost, challenges in value creation, asset quality issues as well as integration risks," it said in a note on Wednesday.
The research house said CIMB Group’s 9M14 core net profit of RM2.890bil was hit by high allowances, caused by deterioration in CIMB Niaga’s asset quality. Excluding Indonesia, group earnings grew instead by 6% on-year. Results were within our expectations, but below consensus, it added.
The annualized results were within Affin Hwang’s expectations but 11% below consensus. There were no dividends in 3Q14 but the group’s dividend policy remains at a 40-60% payout ratio.
http://www.thestar.com.my
