CIMB falls 4.4% after analyst downgrades

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KUALA LUMPUR (Jan 22): CIMB Group Holdings Bhd fell as much as 4.4% in morning trades following a slew of downgrades by analysts.

The downgrades came after CIMB Thai Bank PCL, a 93.71% subsidiary of CIMB Bank Bhd, posted a lower consolidated profit before tax of THB1.23 billion (RM136.28 million) and a lower net profit of THB988.8 million (RM109.79 million) for the financial year ended Dec 31, 2014.

At 11.03 am today, the banking and financial group lost 14 sen or 3% to RM5.73. The fourth top decliner saw trades of some 12.6 million shares. It had earlier fallen to a low of RM5.61.

In a note today, Kenanga Research downgraded CIMB (fundamental: 1.35; valuation: 2.10) to “market perform” from “outperform” given a bleak outlook seen.

The downgrade was also due to a steep run-up of 13% in share price since the mega-bank merger went bust, said the research house.

Affin Hwang Investment Bank Bhd justified its downgrade for CIMB to “sell” based on the group’s weak fourth quarter results and an unexciting 2015 outlook in the financing and capital markets.

“We believe the share price would see some pullback,” said Affin Hwang analysts Tan Ei Leen said in a note today.

MIDF Research also downgraded CIMB to “neutral” from “trading buy” and lowered target price (TP) to RM6.20 from RM6.70.

The research house gathered that operating conditions in FY15 will be “tough”.

“CIMB Niaga is likely to still report weak financial performance in the near term. We now expect only a marginal growth in total income of 4.2% year-on-year in FY15,” MIDF analyst Kelvin Ong wrote in a note today.

As such, Ong also lowered his net profit estimates for FY14 and FY15 by 3.3% and 7.3% respectively.

Kenanga, however, made no changes to its earnings forecasts and retained TP of RM6.27. Affin Hwang also kept its TP of RM5.00.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company's financial dashboard.)