August 27, 2010

CIMB - MIDF downgrades CIMB to neutral, raises target price to RM8.50

Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
Research House: MIDF

KUALA LUMPUR: MIDF Research downgraded CIMB Group Holdings Bhd to neutral from buy previously after the banking group posted net profit RM889.5 million in its second quarter ended June 30, 2010 compared to RM838.1 million in 1Q.

MIDF Research said the higher net profit was contributed by i) higher net interest income from increase in NIM, ii) higher non interest income and iii) lower loan impairment expenses.

"We adjust our target price for the stock to RM8.50 (from RM8), based on 16 times PER on FY11 EPS.

"We continue to peg the stock to a forward PER of 16 times which is higher than its average 5 years historical PER due the Group's stronger position as a regional bank," it said on Friday, Aug 27.

MIDF Research said that as CIMB's share price had surged strongly (+23.4% YTD) beating the KLCI and KLFIN's gain of 10.6% YTD and 15.3% YTD respectively, total return expected (based on the revised target price and dividend yield) is less than 15%.

"Hence, we downgrade our call on the stock from Buy to Neutral," it said.


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