Cost management: CIMB is a stock loved by investors for its liquidity, but they are also quick to punish it at the slightest hint of bearish sentiment.
KUALA LUMPUR: Maybank Investment Research has maintained its Buy call on CIMB Group
Holdings Bhd as it forecasts robusts earnings growth of 27%/16% in FY17/18E with an expected ROAE expansion to 10.6% in FY18 from 7.9% in FY16.
Its target price remains unchanged at RM7.50 on a 2018 price-book value of 1.3x.
CIMB's earnings in the second quarter ended July 30, 2017, was up 26% year-on year(y-o-y) and took first half profit to RM2.16bil, accounting to 49% of Maybank Investment Research's and consensus full-year forecast.
Positives for the quarter include stable net interest margin (-1bp quarter-on-quarter) and ongoing cost control/positive JAWS. On the flip side, loan growth remains subdued, NOII contracted q-o-q in Q2 while credit costs were higher.
"Management’s targeted 9.5% ROE for FY17 does appear to be achievable and our forecast is a tad higher at 9.6% for the year. Into FY18, management targets an ROE of 10.5% to 11% and our forecast of 10.6% is at the lower end of this range.
"Separately, management has announced a first interim dividend per share of 13 sen vs 8 sen in H1FY16, this being a dividend payout ratio (DPR) of 52%. We raise our FY17 DPS forecast to 26 sen from 25 sen, to reflect a higher DPR of 52% versus 50% previously. Forward yields of >3.9% provide support to share price," the research house said.
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