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Affin IB Research maintains Reduce on CIMB, trims target price

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Affin IB Research maintains Reduce on CIMB, trims target price Empty Affin IB Research maintains Reduce on CIMB, trims target price

Post by Cals Wed 06 Aug 2014, 01:02

Affin IB Research maintains Reduce on CIMB, trims target price
Business & Markets 2014
Written by theedgemalaysia.com   
Tuesday, 05 August 2014 08:46

KUALA LUMPUR (Aug 5): Affin IB Research has maintained its Reduce rating on CIMB Group Holdings Bhd at RM7.02 with a lower target price of RM6.63 (from RM7.05) and said it remains cautious on CIMB's outlook, largely due to risks emanating from CIMB Niaga (1H14 net profit was down 8.5% y-o-y) while outlook in 2H14 remains subdued with expectations of further increase in credit costs (driven by Indonesia), lower non-interest income (as Banca fees were capped by the Bank Indonesia) and continuous NIM pressure (10bps compression at the Group level).
In a note Tuesday, the research house said consensus FY14E net profit looks aggressive at RM4.6 billion relative to CIMB's 1Q14 net profit of RM1.1 billion.
“Coupled with a weak 2H14 earnings prospects, this will likely put pressure on stock price.
“Meanwhile, we are also concerned about CIMB potentially forking out a premium to pay for the M&A with RHBCap and MBSB,” it said.
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