Analyst mixed on CIMB Group despite robust Q1 results from Indonesia unit

KUALA LUMPUR, May 2 (Bernama): Analysts are mixed on CIMB Group Holdings Bhd’s outlook despite its 92.5 per cent-owned Indonesian banking unit, PT Bank CIMB Niaga Tbk (Niaga) reported a robust financial results in the first quarter ended March 31,2021 (Q1 FY21).

AmBank Research has maintained a "buy” recommendation on CIMB Group with an unchanged fair value of RM5.50 per share based on FY22 return on equity (ROE) of 9.0 per cent, leading to a price-to-book value ratio 0.9 times.

"The strong Niaga’s earnings in 1QFY21 led to an ROE of 10.5 per cent.

"With the number of COVID-19 cases in Indonesia has been on a declining trend, this, coupled with the optimism on the country’s vaccination programme, are likely to improve consumer and business sentiment leading to an economic recovery in Indonesia, ” analyst Kelvin Ong said in a note today.

According to AmBank Research, Niaga reported a stronger-than-expected Q1 FY21 net profit of IDR996 billion, surging 573 per cent quarter-on-quarter (q-o-q), attributable to higher operating income from stronger net interest income (NII) and non-interest income (NOII).

On a year-on-year (y-o-y) basis, Niaga’s net profit in Q1 FY21 slipped 5.6 per cent due to higher provisions, it said.

Meanwhile, Public Investment Bank Bhd has retained its "neutral” call on CIMB Group with a target price (TP) of RM4.50.

"We remain optimistic over the group’s longer-term prospects, underpinned by its Forward23+(F23+) initiatives, and are encouraged by this turnaround in the Indonesian operations, ” analyst Ching Weng Jin said.

Kenanga Research, however, has maintained its "underperform” call on CIMB Group with an unchanged TP of RM3.50.

Analyst Clement Chua said while the group is expected to register an earnings per share growth of 176 per cent in FY21 estimate, the research house believes that is already priced in, given the impairment shock in Q4 FY20.

"Overall, we are less excited on CIMB Group compared to its outperforming peers, possibly from its less favourable regional exposures, it houses a gross impaired loan ratio of 3.0 per cent, whereas its larger-capitalisation peers come in at less than 3.0 per cent, ” Chua said.

At 10.58am, CIMB’s share eased two sen to RM4.17 with 1.47 million shares changing hands. - Bernama

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