KUALA LUMPUR: The recent announcement of Datuk Sri Nazir Razak's departure from CIMB Group
will not have a negative impact as the group's fundamentals remain solid.
MIDF Research said in a Tuesday report that it was neutral on news of the group chairman's exit as the group could be considered "institutionalised" and does not depend on any one individual.
It noted the group had changed CEOs in 2014 without any negative impact.
Meanwhile, it said CIMB remained operationally strong.
"For example, as at 1HFY18, normalised 1HFY18 net profit grew +3.3%yoy despite net income declining -5.2%yoy as it was moderated lower loan provisions which fell -29.4%yoy to RM746m.
"Also, since the introduction of its T18 initiative, management have managed to contain OPEX. In 2QFY18, OPEX fell for the second consecutive quarter with -2.5% yoy (vs. -6.8% yoy in 1QFY18).
"Furthermore, we opine that the Group is on track to achieve its FY18 targets, with possible headwinds in terms of income to be moderated by containment in expenses and credit cost."
The research house reiterated its buy call on the counter with an unchanged target price of RM7.85.
"At current valuation, we believe that the stock is undervalued given its prospects and have lagged its peers recently."
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