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Share
Price:
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MYR4.74
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Target
Price:
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MYR4.70
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Recommendation:
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Hold
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Trending within
expectations
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The operating environment for CIMB Group is stable and
guidance thus far would point to an improved outlook for its Thai and
Indonesian operations into 2017. While we are positive on these
developments, we think much is reflected in our forecasts. Against a
projected ROE of 8.7% for FY17, we continue to peg valuations to a FY17
P/BV of 0.9x – our HOLD call and TP of MYR4.70 are thus maintained.
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Operating income
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14,145.9
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15,395.8
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15,707.6
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16,322.6
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Pre-provision profit
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5,854.0
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6,146.8
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7,041.2
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7,362.1
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Core net profit
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3,159.0
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3,411.2
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3,501.1
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3,931.5
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Core FDEPS (MYR)
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0.37
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0.34
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0.42
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0.45
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Core FDEPS growth(%)
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(37.5)
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(10.3)
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24.4
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7.7
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Net DPS (MYR)
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0.15
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0.14
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0.17
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0.19
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Core FD P/E (x)
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12.6
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14.1
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11.3
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10.5
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P/BV (x)
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1.0
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1.0
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0.9
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0.9
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Net dividend yield (%)
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3.2
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3.0
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3.6
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4.0
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Book value (MYR)
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4.53
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4.87
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5.06
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5.33
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ROAE (%)
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9.3
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8.7
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8.2
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8.7
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ROAA (%)
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0.8
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0.8
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0.7
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0.8
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MACRO RESEARCH
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Strong finish to 2016
by
Suhaimi Ilias
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Total trade growth picked up in Dec 2016 to +9.9% YoY
(Nov 2016: +8.7% YoY), pushed up by oil trade surge (Dec 2016: +30.2%
YoY; Nov 2016: +24.7% YoY). Trade surplus widened to +SGD5.4b (Nov
2016: +SGD4.9b). Trade outlook for 2017 is case of upside surprise
from firmer global demand versus the downside risk of US-China trade
conflict.
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Suhaimi Ilias
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Zamros
Dzulkafli
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NEWS
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Outside Malaysia:
E.U: Car sales rose 6.5% to a nine-year high in 2016,
propelled by pent-up demand amid a recovering economy. Registrations
increased to 15.1 million vehicles last year from 14.2 million in 2015,
the Brussels-based European Automobile Manufacturers’ Association, or
ACEA, said. (Source: Bloomberg)
U.K: Inflation accelerated more than forecast in December
as signs mounted that the pound’s decline is leading to a surge in import
costs. Consumer-price growth increased to 1.6% YoY, the highest since
July 2014, from 1.2% YoY in November. A separate report showed the cost
of imports soared at the fastest annual rate in more than five years.
(Source: Bloomberg)
China: PBOC adopts mid-term credit tool as old benchmark
fades away. China is increasingly managing the flow of credit with more
finely-tuned instruments than its old method of changing how much of
their deposits lenders must keep locked away. Banks’ required reserve
requirements haven’t changed for almost a year. Instead, the central bank
has used short-term lending channels to add almost six times as much
funding than would have been added by lowering banks’ RRRs by half a
percentage point. The PBOC pumped in a net CNY 270b (USD 39b) through
open-market operations, the most in a year, data compiled by Bloomberg
show. That followed last week’s CNY 305.5b of MLF operations, the main
short-term lending tool used to meet banks’ medium-term cash demand.
(Source: Bloomberg)
Thailand: Chinese tourists become a wildcard for growth
outlook. Thailand is nursing a slide in Chinese holidaymakers after
cracking down on low-budget tours from the world’s most-populous country,
muddying the Southeast Asian nation’s economic growth outlook. Arrivals
fell about 30% YoY in November, extending a slide that began in September
after Thailand clamped down on operators bringing in large groups from
China on cut- price holidays. Some of the impact could linger in the
early part of 2017, according to Kasikorn Research Center Co. Thailand’s
military government is seeking to focus on smaller groups of
higher-spending visitors to bolster the tourism industry longer term.
Chinese visitors last year were the most by headcount and tourism
accounts for about 11% of Thailand’s USD 395b gross domestic product.
Economic expansion was subdued even before the move against the so-called
zero-dollar tour groups from China. (Source: Bloomberg)
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Other News:
Construction: China Huashi appointed main contractor for
M101 Skywheel project. Property developer M101 Holdings S/B has appointed
China Huashi Enterprises Co Ltd as the main contractor for the M101
Skywheel project which has an estimated gross development value of
MYR1.8b. Its CEO Datuk Seth Yap said China Huashi would finance the
project’s MYR50m construction cost. The project in Kampung Baru was
expected to be completed by 2020. The M101 Skywheel project is a
52-storey mixed development skyscraper that would further propel Malaysia
into the region’s property and development industry after the Petronas
Twin Towers fame. It would house a Ferris-wheel on the 52nd floor at its
highest vantage point of 220m above ground level. (Source: The Sun Daily)
Ekovest: Bags MYR6.32b job to build highway. Its
subsidiary Lebuhraya DUKE Fasa 2A S/B wins a MYR6.32b job to build an
expressway that consists of Kampung Baru Link, Istana Link and Kapar Link
Expressway in the Klang Valley. The group has received a letter on the principal
approval from the government for the construction of the 75.2km
expressway. The highway project is expected to be funded by internally
generated funds, borrowings and/or other fundraising exercises. (Source:
The Edge Financial Daily)
Toyo Ink: Inks MoA on power plant in Vietnam. The group
has signed a Memorandum of Agreement with the Department of Natural
Resources and Environment of Hau Giang Province in Vietnam with both
parties agreeing to confirm the terms and conditions as set out in the Land
Lease Agreement to develop a thermal power plant project. To recap, Toyo
Ink had in 2013 received approval from the Vietnam government to be the
project investor to invest and develop a 2x1,000 MW coal-fired thermal
power plant on a BOT basis, with a concession period of 25 years. The
mega-project was estimated to cost USD3.5b. (Source: The Edge Financial
Daily)
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