We maintain BUY on CIMB Group Holdings, with an unchanged fair value of RM5.40/share, based on an ROE of 9.4% for FY17F leading to a P/BV of 1.0x.

STOCK FOCUS OF THE DAY

CIMB Group :  More stable foreign shareholdings            Buy

We maintain BUY on CIMB Group Holdings, with an unchanged fair value of RM5.40/share, based on an ROE of 9.4% for FY17F leading to a P/BV of 1.0x.

Foreign shareholdings inched lower to 25.6% as at end-July 2016 from 25.7% in June 2016 and 27.7% in May 2016.

We observe the stock's foreign shareholdings to be more stable in July 2016. This was in contrast to a much heavier sell-down of the shares in May and June 2016, which we believe was due to the reduction of Malaysia's stocks in the MSCI from 31 May 2016.

The sell-down stemmed from the rebalancing of the weightage of Malaysia's stocks in the index. A similar trend was observed in Maybank's foreign shareholdings that declined from 18.0% on 27 May 2016 to 16.0% on 29 July 2016. Since then, Maybank's foreign shareholding has been stable, hovering at ~16.0%.

We estimate a net sell-down of 9mil shares in July 2016, compared with a net sell-down of 113mil and 173mil shares in May and June 2016, respectively.

On a year-to-date basis, we estimated a net sell down of  87mil CIMB shares.

We expect investor sentiment to be more positive on the stock with the stabilisation of provisions in Indonesia.

We maintain BUY due to attractive valuations, with the stock trading at 0.9x to our FY17 book value per share compared with the sector average P/BV of 1.2x, expected earnings recovery from cost-cutting initiatives and earnings surprises from potential write-backs of provisions made in Indonesia.

Others :

Astro Malaysia : Nothing out of the ordinary       Hold

QUICK TAKES

Mah Sing : Still in discussions for KGSSAAS land buy         Buy

Property Sector : 55% of 157 developers not launching projects in 2H16                 Neutral

ECONOMIC HIGHLIGHTS

Thailand : Expect the current monetary policy to be preserved

NEWS HIGHLIGHTS

Property Sector : LBS Bina total sales at RM873m, expects to meet FY target of RM1.2b

Building Materials Sector : Melewar looking into fund raising

Agricultural Sector : Malaysian palm oil price hits near 2-week low on weak demand