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Friday, July 9, 2010

KLCI Stock - CIMB / 1023 - 2010 Quarter 1

Market Cap : 7063529820*7.09 = 5,008,0426,423.80 (Large)
NTA per share : (20572607-7693284-1633653)/7063530 = 1.59
P/BV : 7.09/1.59 = 4.4591
Forecast P/E now : (7.09-0.0925)/0.5205 = 13.54 (Moderate)
ROE : 12.71% (Moderate)
DY : 0.0925/7.09*100 = 1.3% (Low)
Fixed Asset Turnover : Not applicable
Liquidity Ratio : Not applicable
Receivables Collection Period : Not applicable
My Target Price : 7.6+0.09 = 7.69 (PE 14.6, EPS 0.5205, DPS 0.0925)
My Decision : BUY
My Comment : Revenue and profit increasing, bad cash flow, navps increasing
Technical Support Price : 6.6
Risk Rating : LOW
OSK Target Price : 7.95 (21 May 10)

My notes based on 2010 Quarter 1 report (number in '000):-
- CIMB Group Holdings Berhad (“CIMB Group”) reported a 36.5% year-on-year (“Y-o-Y”) growth in 1Q10 net profit
- With the release of these results, CIMB is the first Malaysian bank to prepare its financial statements in full compliance to FRS 139 principles although the industry remains under Bank Negara Malaysia’s transitional arrangement. The Group's full adoption of FRS 139 means that it is now fully compliant with global best accounting standards, consistent with its commitment to be benchmarked against highest standards of governance and transparency
- CIMB Group’s 1Q10 revenues increased by 13.0% Y-o-Y while the Group’s profit before tax (“PBT”) was 34.6% higher
- For 1Q10, the Group’s Malaysian consumer bank PBT grew 9.5% Y-o-Y in line with the continued turnaround in CIMB Bank’s operations as recoveries at Group Special Assets Management (or “bad” bank) were relatively flat. PBT at Treasury & Investments declined 30.0% Y-o-Y largely due to lower investment gains during the period. The improved capital market activities brought about the 103.4% Y-o-Y jump in Corporate & Investment Banking PBT
- CIMB Niaga’s contribution surged 264.7% Y-o-Y previously attributed to both significant operational improvement as well as gains arising from the sale of available for sale (“AFS”) bonds in 1Q10. Meanwhile, CIMB Thai turned a RM6 million PBT contribution in 1Q10 compared to the RM18 million loss in 1Q09. Asset Management and Insurance PBT was 87.9% lower Y-o-Y at RM4 million as the better performance of its fund management companies was offset by start-up costs and provisions taken at CIMB SunLife (Indonesia) and CIMB Aviva (Malaysia)
- Total non-Malaysian PBT jumped to 46% in 1Q10 from 19% in 1Q09 due to the surge in contribution from CIMB Niaga
- The Group’s total gross loans expanded 12.1% Y-o-Y, underpinned by the Malaysian consumer loans which grew 15.6% as well as a strong 31.7% expansion (in RM terms) in CIMB Niaga’s gross loans. Mortgages, credit cards and the Group’s micro credit lending grew by 21.8%, 32.1% and 55.9% respectively Y-o-Y. Hire purchase loans are resuming the uptrend with a 4.1% Y-o-Y growth although business banking loans continued to decline by 3.2% Y-o-Y. Corporate loans were also 3.5% lower Y-o-Y
- Total Group deposits grew by 6.8% Y-o-Y as CIMB Bank’s retail deposits grew 16.5% Y-o-Y underpinned by the growing Singapore retail operations. Excluding Singapore, CIMB Bank’s 1Q10 retail deposits were 7.2% higher Y-o-Y
- The total loan impairment (under FRS139 policies) for the Group was RM150 million in 1Q10. Although this is a 44.9% Y-o-Y decline versus the loan loss provision of RM272 million in 1Q09 (under Garis Panduan 3 (“GP3”) policies), the numbers are not directly comparable due to differing accounting treatments. The Group’s total annualised credit charge was 0.40%, lower than the 0.60% full year target. The Group’s gross impairment ratio was 7.5% for 1Q10, with an impairment allowance coverage of 80.5%. The Group’s cost to income ratio rose to 55.0% compared to 52.8% in 1Q09
- CIMB Bank’s risk weighted capital ratio improved to 15.6% as at 31 March 2010 (assuming inclusion of 1Q10 net profits) against 15.1% as at 31 December 2009. CIMB Group’s double leverage and gearing stood at 119.8% and 26.9% respectively as at end-March 2010
- The Group’s 1Q10 revenues of RM2.84 billion was 2.2% higher versus 4Q09, while Group net profits grew 4.4%
- CIMB Niaga reported a 1Q10 net profit of IDR524 billion, a 99.6% Y-o-Y growth with a 1Q10 net ROE of 18.3%. The stronger performance was attributed to the strong loans growth, higher Net Interest Margins (“NIMs”) and lower provisions. Profits from sale of AFS bonds by CIMB Niaga are not recognised in CIMB Niaga itself but at Group consolidated accounts. On a sequential basis, the 1Q10 net profit was 26.0% higher than 4Q09 primarily due to lower loan loss charges
- CIMB Niaga’s gross loans grew 14.1% Y-o-Y in 1Q10 driven by the corporate and auto loans segments. Gross NPL was higher at 3.1% as at end-March 2010 compared to 2.8% as at the corresponding period last year. CIMB Niaga continues to retain the 2nd lowest position in net NPL ratios amongst Indonesian banks while loan loss coverage was increased to 115.4% as at end-1Q10 compared to 84.5% as at end-1Q09
- CIMB Niaga’s Tier 1 capital and risk weighted capital ratios stood at 10.9% and 12.8% respectively as at 31 March 2010
- CIMB Thai announced a 1Q10 net profit of THB348 million, a turnaround from the THB257 million loss in 1Q09. This had included a THB290 million gain arising from the sale of the Sathorn building. Excluding this one-off gain, CIMB Thai would have recorded a 1Q10 net profit of THB58 million. For the 3-month period, CIMB Thai chalked revenue of THB1.80 billion, up 11.5% Y-o-Y. As a result of GAAP adjustments, CIMB Thai’s contribution to the Group’s 1Q10 earnings was RM6 million, compared to a negative RM18 million in 1Q09
- CIMB Thai’s Tier 1 capital and risk weighted capital ratios (based on Basel II framework) were at 6.1% and 12.1% respectively
- The Group is monitoring the Thai situation closely. So far, the political unrest has impeded access to its HQ and some branches in Bangkok. However, the Group is operating effectively from its back-up sites where required and remain focused on executing its transformation plan for its new franchise
- CIMB Islamic’s Y-o-Y PBT jumped 100% to RM80 million as Syariah-compliant banking products continue to gain ground. CIMB Islamic’s gross financing assets grew 127.8% Y-o-Y, accounting for 12% of total Group loans. Total deposits grew by 53.7% Y-o-Y to RM17.6 billion. With its total assets at RM27.8 billion as at 31 March 2010, CIMB Islamic remains the second largest Islamic bank in Malaysia with a 12% market share
- CIMB Investment Bank remained the leading stockbroker in Malaysia and regained first place in the M&A league tables, while maintaining its number one position in Initial Public Offering (“IPO”) and Equity Capital Market (“ECM”) advisory. CIMB Islamic remained at the top of the domestic and global Islamic investment banking league tables. CIMB Bank is the second largest mortgage lender in Malaysia and expanded its share of retail deposits and credit cards. In Singapore, CIMB Securities was the 4th largest in stockbroking market share and number 1 in mid-sized corporate advisory. CIMB Niaga remains the second largest mortgage lender in Indonesia while PT CIMB Securities has moved up to 2nd in stockbroking market share. CIMB Thai secured the number one position in the Thai M&A segment. CIMB Principal Asset Management remains the second largest asset manager in Malaysia
- Estimate next 4Q eps after 2010 Q1 result announced = 0.2366*4*1.1 = 1.041(10% increase quarter-by-quarter), after bonus estimate eps = 1.041/2 = 0.5205, estimate PE on current price 7.09 = 13.44(DPS 0.185/2 = 0.0925)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.2268*4*1.1 = 0.9979, estimate highest/lowest PE = 14.67/12.5 (DPS 0.185)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.2058*4*1.1 = 0.9055, estimate highest/lowest PE = 14.72/13.04 (DPS 0.25)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1879*4*1.1 = 0.8268, estimate highest/lowest PE = 15.59/11.73 (DPS 0.25)

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