PUBLICINVEST RESEARCH KEEPS EARNINGS ESTIMATES ON CIMB UNCHANGED

KUALA LUMPUR, Dec 8 -- Public Investment Bank Research (PublicInvest Research) has maintained its earnings forecasts on CIMB Group Holdings Bhd as lowered stake in stockbroking joint venture (JV) is likely to result in only marginal loss in earnings or less than one per cent.

CIMB yesterday announced wholly owned subsidiary CIMB Group Sdn Bhd (CIMBG) has completed the sale of 24.99 per cent and 25 per cent of its shareholding in CGS-CIMB Securities International Pte Ltd (CSI) and CGS-CIMB Holdings Sdn Bhd (CCH) respectively to China Galaxy International Financial Holdings Ltd (CGI).

CSI and CCH are the holding companies of the group’s stockbroking JV with China Galaxy Securities.

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“While it has been disclosed that China Galaxy International had exercised a call option that was included in the JV agreement, we think this move also makes sense from CIMB’s standpoint as it repurposes and redefines its financial goals, underpinned by its F23+ initiatives.

“These include re-shaping its portfolio (accelerate profitable growth areas, fix and turn around underperforming businesses) and undertaking focused investments,” PublicInvest Research said in a note.

Post-completion of the sale, the group’s interest in both entities will fall to 25.01 per cent and 25 per cent respectively while CGI’s interest will increase to 74.99 per cent and 75 per cent.

The research house said it remains optimistic over CIMB’s longer-term prospects, reflected by ongoing improvements in its core operational numbers.

It projects a pre-tax profit of RM5.99 billion and RM6.45 billion for CIMB for financial year 2021 and 2022 respectively.

“We retain our neutral call given limited upside to our target price of RM5.50 however,” it said.

At 10.20 am, CIMB shares dipped one sen to RM5.29 with 1.74 million shares traded.

-- BERNAMA