KUALA LUMPUR (Jan 15): PublicInvest Research has maintained its “Neutral” rating on CIMB Group Holdings Bhd at RM5.75 with a lower target price of RM6.40 after the deal which would have seen the creation of the nation’s largest banking group by asset size and the accompanying creation of a mega-Islamic bank was called off.
“Current economic conditions and the difficulties in arriving at a value-creating transaction for all stakeholders were cited as the deal-breakers,” it said in a note Thursday.
The research house said with focus now back on CIMB as a single entity, there could be some trading interest returning to the stock, though price upside will be capped by near-term fundamental challenges.
“While we continue to believe in the longer-term prospects and intrinsic value of the group, currently weak capital markets, economic conditions and foreign exchange volatilities will be an overhang on earnings.
“Our Neutral call is retained, but with a lowered target price of RM6.40 as we reduce our dividend-growth assumptions,” it said.