Thursday, August 3, 2017

Kossan Rubber Ind., TRC Synergy, CCK Cons. Hldgs,Dialog Group

CIMB Group : Slower pace for IB and corporate banking in 2QFY17                            HOLD

We maintain our HOLD recommendation on CIMB Group with an unchanged fair value of RM6.70/share. Our fair value is based on FY18 P/BV of 1.2x on the back of an ROE of 10.4%. Management provided some updates on the group yesterday. We understand that in Malaysia, 2QFY17 was a slower quarter for wholesale banking. Execution of IB deals and corporate banking loans was slower in the quarter. Nevertheless, for the start of 3QFY17, the momentum for IB and corporate banking loans has picked up. This is seen positive on the group's fee income. It has a decent pipeline of corporate loans. Meanwhile, performance of its retail banking in Malaysia has been steady.

Earlier, the group had guided for a NIM contraction of 5 to 10bps in FY17. However, with the strong NIM of CIMB Niaga in 1HFY17 due to higher CASA ratio and active management of liabilities, there is a potential for the group's NIM to turn out better than its guided compression of 5 to 10bps. Management does not see much pressure on the group's funding cost as its loans are not growing that aggressively. No changes to the group's targets for FY17 (ROE: 9.5%; credit cost of 0.60-0.65%, total loan growth of 7.0%; CET1 ratio >11.5% and CI ratio of < 53.0%). For FY18, the group's ROE target is 10.5%-11.0%; CI ratio of 50.0% and credit cost of < 0.60%.  CIMB Group's results are scheduled to be released on 28 August.

Others :
Hartalega Hldgs : FY18F to be anchored by capacity growth                           HOLD
Prestariang : Core business continues to deliver                                                HOLD
Gent Singapore : Rise in trade receivables again                                                SELL

Kossan Rubber Ind., TRC Synergy, CCK Cons. Hldgs,Dialog Group

India : Another rate cut on the table

Construction Sector : CRRC-led consortium wins RM1.56b LRT3 work package
Construction Sector : SEB awards RM3bil job to China JV firm
Glomac : Glomac plans one-for-10 bonus issue
Yong Tai  : Major shareholder of Yong Tai ups stake

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