KUALA LUMPUR (Jan 15): CIMB Group Holdings Bhd, the most-active stock on the exchange, rose 29 sen or 5% after the financial services entity said its proposed merger with RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) was aborted.

At 9:03am, CIMB (fundamental score: 1.35; valuation score: 2.1) was traded at RM6.04 with some seven million shares done. The stock, which was also the third-largest gainer, changed hands at RM5.97 at 9:40am.

Yesterday, CIMB, RHB Capital (fundamental score: 1.5; valuation score: 2.1) and MBSB  (fundamental score: 1.2; valuation score: 2.4) said in separate statements to the bourse that the planned merger was aborted.

They said the merger plan termination had taken into account current economic conditions.  

Today, RHB Capital shares also gained on the news. At 9.05am, the stock rose 25 sen or 3.3% to RM7.92 with 57,500 units done.

The exchange's fifth-largest gainer had later changed hands at RM7.76 at 9.44am.

MBSB, however, fell. At 9.47am, the stock declined three sen or 1.4% to RM2.13 with about four million changing hands.

Following news on the aborted merger proposal, Kenanga Investment Bank Bhd said it had upgraded RHB Capital shares to "outperform" with an unchanged target price (TP) of RM9.35.
 
Kenanga, however, cut its TP for MBSB to RM2.65 from RM2.82 with an unchanged "outpeform" recommendation. On CIMB, Kenanga said it had retained its "outperform" call and RM6.27 TP for the stock.

"Taking a cue from this development, we are of the view that there is lower likelihood to see any other domestic merger efforts in the short-run. We keep our NEUTRAL view on the sector as it still lacks rerating catalysts," Kenanga said.

(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.)