Company Name: CIMB GROUP HOLDINGS BERHAD
|Research House: OSK||Price Call: HOLD||Target Price: 7.62|
OSK Research Sdn Bhd has maintained its "neutral" call on CIMB Group Holdings but reduced its fair value for the stock to RM7.62.
With the increasing volatility in the capital markets and its potential negative repercussions on equity deal flows, OSK Research has toned down its earnings estimates for the group by 3.6 per cent with expectations of a further slowdown in capital market activities.
The research house said it was reacting "neutral" to the news where CIMB Group has proposed to acquire a 70 per cent stake in a public listed Thai broker, SICCOSecurities Public Ltd (SICCO), for a cash consideration of RM78.4 million.
"We are neutral on the acquisition as both the earnings impact and capital commitment is negligible, at less than 0.1 per cent to group earnings, and 0.3 per cent of the group's cash balance," it said in its research note here today.
SICCO is a small Thai broker with an approximately 1.5 per cent brokerage market share in Thailand, translating into a revenue and net profit of just RM41.1 million and RM3.9 million respectively as at Dec 31, 2010.
"CIMB Group intends to be among the top five players in the Thai Securities market and this acquisition is expected to raise its market share to approximately three per cent.
This is still significantly below the UBS Wealth Management Solutions in Thailand, which is currently ranked fifth, with a brokerage share of 4.88 per cent," it added. -- Bernama