KUALA LUMPUR (April 30): Analysts are mixed on CIMB Group Holdings Bhd’s outlook, even though its 92.5%-owned Indonesian banking unit PT Bank CIMB Niaga Tbk (CIMB Niaga) reported a robust set of financial results for the first quarter ended March 31, 2021 (1QFY21).

AmBank Research maintained its “buy” recommendation on CIMB Group, with an unchanged fair value (FV) of RM5.50 per share, based on an estimated FY22 return on equity (ROE) of 9%, leading to a price-to-book value ratio of 0.9 times.

“CIMB Niaga’s strong earnings in 1QFY21 led to an ROE of 10.5%.

“With the number of Covid-19 cases in Indonesia on a declining trend, this, coupled with optimism about the country’s vaccination programme, is 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, CIMB Niaga reported a stronger-than-expected 1QFY21 net profit of 996 billion rupiah, surging 573% 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, CIMB Niaga’s net profit for 1QFY21 slipped 5.6% due to higher provisions, it said.

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

“We remain optimistic about the group’s longer-term prospects, underpinned by its Forward 23+ initiatives, and are encouraged by the turnaround of its Indonesian operations,” analyst Ching Weng Jin said.

Kenanga Research, however, 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 (EPS) growth of 176% in FY21, the research house believes that is already priced in, given the impairment shock in 4QFY20.

“Overall, we are less excited about CIMB Group compared to its outperforming peers, possibly due to its less favourable regional exposure; it houses a gross impaired loan ratio of 3%, whereas its larger-capitalisation peers come in at less than 3%,” Chua said.

At 2.43pm today, CIMB Group’s share price had eased three sen or 0.72% to RM4.16, with 2.56 million shares changing hands.

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