KLCI Stock - CIMB / 1023 - 2011 Quarter 2

Company Info

Market Capital (Capital Size)	52,401,061,254 (Very Large)
Par Value	RM 1.00

My Analysis

Forecast P/E now	(7.05-0.26)/0.4176 = 16.26 (High)
Target Price	6.68+0.26 = 6.94 (PE 16.0, EPS 0.4176, DPS 0.26)
Decision	Not interested unless stock price sustain above 7.3
Comment	Revenue decreased 13.2% and also lower than preceding year corresponding quarter 1.3%, eps increased 4.2% and also higher than preceding year corresponding quarter 4.5%, no cash generated from operating or investing and is over spent and still no cash generate from financing activities, lower revenue is due to lower other income, interest and islamic banking income still high, unusual low allowance of losses on loans, advance & financing, if normal then profit have to deduct another RM160 million
First Support Price	6.9
Second Support Price	6.4
Risk Rating	MODERATE

Research House

Affin Target Price	10 (2011-01-21)
Golman Sachs Target Price	10 (2011-04-18)
AMMB Target Price	9.7 (2011-07-20)
Maybank Target Price	9.6 (2011-08-09)
ECM Target Price	7.88 (2011-08-24)
HLG Target Price	9 (2011-08-24)
Kenanga Target Price	9.1 (2011-08-24)
MIDF Target Price	9 (2011-08-24)
TA Target Price	9.7 (2011-08-24)
RHB Target Price	7.49 (2011-08-29)
HwangDBS Target Price	7.4 (2011-09-08)
OSK Target Price	8.2 (2011-09-08)

Accounting Ratio

Return on Equity	14.75%
Dividend Yield	4.74%
Profit Margin	43.19%
Tax Rate	23.23%
Asset Turnover	0.0418
Net Asset Value Per Share	3.33
Net Tangible Asset per share	2.03
Price/Net Tangible Asset Per Share	3.84
Cash Per Share	7.49
Liquidity Current Ratio	1.1139
Liquidity Quick Ratio	0.9817
Liquidity Cash Ratio	0.2298
Gearing Debt to Equity Ratio	10.3594
Gearing Debt to Asset Ratio	0.9097
Working capital per thousand Ringgit sale	234.1%
Days to sell the inventory	1744
Days to collect the receivables	5228
Days to pay the payables	12677

My notes based on 2011 quarter 2 report (number in '000):-
- CIMB Group’s 1H11 revenues decreased by 1.5% Y-o-Y to RM5.71 billion due to lower non-interest income as last year’s revenues were boosted by sales of ex-Lippo Bank bonds (excluding this, revenues would have increased 3.5%). The Group’s profit before tax (“PBT”) was 8.5% higher at RM2.51 billion as credit losses remained subdued

- For 1H11, the Group’s Malaysian consumer bank PBT increased by 83.3% Y-o-Y to RM715 million as the 11.9% improvement in revenue was enhanced by low credit charges. PBT at Corporate & Investment Banking (“CIB”) rose 1.2% Y-o-Y to RM493 million, while Treasury & Investments declined 15.7% Y-o-Y to RM461 million

- CIMB Niaga’s PBT rose 39.6% to IDR2,123 billion but its contribution to the Group was 11.1% lower Y-o-Y at RM736 million due to the absence of gains arising from the sale of ex-Lippo Bank bonds which occurred in 1H10. CIMB Thai’s PBT contribution (after GAAP and FRS139 adjustments) surged to RM49 million from RM26 million in 1H10. Asset Management and Insurance PBT rose 57.9% Y-o-Y to RM57 million due to the non-recurrence of provisions for doubtful debts made at CIMB Aviva in 1H10

- The Group’s total gross loans expanded 11.0% Y-o-Y, underpinned by the strong 25.9% growth (in RM terms) at CIMB Niaga as well as the 13.7% increase in Malaysian consumer loans. Mortgages, credit cards and the Group’s micro credit lending grew by 17.3%, 19.1% and 72.0% respectively Y-o-Y. Hire purchase loans grew at a modest 4.6% Y-o-Y but commercial banking loans declined 1.0% Y-o-Y. Corporate loans contracted 5.3% Y-o-Y. The Group's overall net interest margins eased to 3.11% from 3.38% last year

- Total Group deposits grew by 8.8% Y-o-Y underpinned by a 26.7% expansion in CIMB Bank’s retail deposits. CIMB Niaga’s focus on deposit accumulation resulted in a 14.6% Y-o-Y growth. CIMB Thai’s deposits however, grew by only 2.0%

- Estimate next 4Q eps after 2011 Q2 result announced = 0.1305*0.8*4 = 0.4176(reduce 20% non-interest income due to market sluggish), estimate PE on current price 7.05 = 16.26(DPS 0.26)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.1097*4*1.1 = 0.4827(deduct RM160 million losses on loans, advance & financing), estimate highest/lowest PE = 18.29/15.66 (DPS 0.18)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.49*1.05 = 0.5145, estimate highest/lowest PE = 15.86/14.69 (DPS 0.26)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.1267*4*0.97 = 0.4916, estimate highest/lowest PE = 18.29/15.99 (DPS 0.18)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.125*4*1.1 = 0.55, estimate highest/lowest PE = 15.42/13.78 (DPS 0.14)
- 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 highest/lowest PE = 15.19/12.46 (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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