We maintain BUY on CIMB Group Holdings (CIMB), with a higher fair value of RM6.70/share (previously RM6.30/share). Our revised fair value is based on a higher FY18F ROE of 10.4% (previously 9.9%) leading to P/BV of 1.2x. We have raised our net profit estimate for FY17/18/19 by 3.4%/5.1/3.8% respectively to

STOCK FOCUS OF THE DAY

CIMB Group : Strong start to FY17 with higher operating income and lower provisions                     BUY

We maintain BUY on CIMB Group Holdings (CIMB), with a higher fair value of RM6.70/share (previously RM6.30/share). Our revised fair value is based on a higher FY18F ROE of 10.4% (previously 9.9%) leading to P/BV of 1.2x. We have raised our net profit estimate for FY17/18/19 by 3.4%/5.1/3.8% respectively to account for higher non-interest income (NOII) as well as a lower CI ratio assumption for FY18 and FY19. 1QFY17 core net earnings came in strongly with a growth of 45.0% YoY to RM1.18bil. The improvement was driven by higher NOII of 37.3% YoY from better capital market activities and higher net interest income (NII) of 11.0% YoY on the back of improved NIM and loan growth. Annualised ROE for 1QFY17 was robust at 10.3% against our expectation of 8.9% for the full FY17.

We tweaked our net profit estimates for FY17/18/19 higher by 3.4%/5.1/3.8% respectively after revising our NOII estimates higher from an improved outlook for capital market activities. Also adjusted was our CI ratio assumption for FY18/19 to 49.5%/49.0% (previously 50.5%/50.0%). The lower CI ratio assumption is to account for potential cost savings from the sale of 50.0% of its stockbroking business to China Galaxy Securities. Maintain our BUY call on CIMB with a higher fair value of RM6.70/share (previously RM6.30/share). Our fair value is based on FY18F ROE of 10.4% leading to a higher P/BV of 1.2x (previously 1.1x).

Others :

MBM Resources : Fixes yet to kick in                                                                       HOLD

Malaysia Building Society : Marginal improvement in asset quality             HOLD

TH Plantations : Driven by higher CPO and PK prices                                         HOLD

TSH Resources : A cleaner 1QFY17                                                                            HOLD                                                                                    

QUICK TAKE

DRB-Hicom : Sketching a different tomorrow for Proton                                HOLD

STOCKS ON RADAR

Chemical Company of Malaysia,OCK Group,Wellcall Holdings,Brem Holdings

ECONOMIC HIGHLIGHTS

Thailand : BoT expected to maintain policy rate

US : Fed’s next step is to unwind balance sheet

NEWS HIGHLIGHTS

Hengyuan Refining : Despite exceptional first quarter, HRC adopts cautious optimistic outlook

Hovid  : Hovid’s results hit hard by production downtime

CCM : CCM allocates up to RM130mil in capex this year

TA Enterprise : TA open to partnership