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Friday, February 15, 2013

Affin keeps Add rating for CIMB, Maybank Research maintains Sell (STAR)

KUALA LUMPUR: RHB Research Institute retained its fair value of RM8.70 for CIMB Group based on the target CY13 price-to-earnings ratio (PER) of 13 times.

It said on Friday CIMB was an excellent proxy to the ongoing rollout of projects under the Economic Transformation Programme, Public-Private Partnership and various economic corridor projects.

“However, near-term risk we see is the upcoming general elections, although this could present investors the opportunity to buy on weakness'. Trading Buy recommendation maintained,” it said.

Affin Investment Research is maintaining its Add rating for CIMB Group and price target of RM8.73, which is two times price to book value (P/BV).

It said on Friday the factors were based on several assumptions of FY2013 returns on equity of 15.5%, growth rate at 7% and cost of equity of 11.2%.

"At RM7.16, CIMB is trading at a P/BV of 1.7 times FY13 and 1.5 times FY14, in-line with its prospective mean P/B multiple of 1.7 times multiple but below its one standard deviation of 2.2 times," it said.

Affin Research said for FY12, CIMB Niaga achieved a 33% growth in net profit to Rp4,233bil or RM1.354bil.

"The results were within our expectations and accounted for 32% of our FY12 net profit forecast of RM4,208.7m for the CIMB Group," it said.

Meanwhile, Maybank KE Research is maintaining its Sell on CIMB Group and its target price of RM7.30 for now, pending the group's results release on Feb 25.

"Sentiment towards the stock is likely to remain weak ahead of the 13th general election and further volatility is to be expected owing to its high foreign holding of 34.8%," it said on Friday.

Maybank Research said its target price of RM7.30 was based on a price-to-book value of 1.8 times, returns on equity of 15.9%.

It said CIMB Niaga's Q4, 2012 results were marginally above its expectations, contributing to a full-year net profit variance of about 4.6%.

"Factoring in a weaker Rupiah in Q4, 2012 vs Q3, 2012 however, the overall impact to CIMB's FY12 earnings would be a more muted 3% increase," it said.

Its FY13 net profit forecast for CIMB Niaga is raised by 6% on faster growth in non-interest income.

Treasury income growth has been stronger than anticipated in FY12; its momentum is likely to sustain as the bank shifts towards customer-based transactions.

"Overall, however, this translates to a more modest 2% increase in earnings for the CIMB group, and our forecasts are maintained for now. We expect CIMB Niaga to contribute 32% to group net profit in FY13 (FY12: 31%)," it said.


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