CIMB up 2.77% on firmer 1Q earnings, target price upgrade
25 May 2017, 10:33 am
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KUALA LUMPUR (May 25): CIMB Group Holdings Bhd shares rose 2.77% at mid-morning today after its net profit in the first quarter ended March 31 (1QFY17) rose 46% to a record RM1.18 billion from RM813.8 million a year ago, driven by higher interest, non-interest and Islamic banking income.

At 10.15am, CIMB rose 17 sen to RM6.30 with 6.21 million shares traded.

Also supporting the gains was lower bad loan allowance, said CIMB. Quarterly revenue was higher at RM4.36 billion versus RM3.73 billion.

Meanwhile, AffinHwang Capital Research has maintained its “Buy” rating on CIMB at RM6.13 with a higher target price of RM7 (from RM6.30) and said CIMB kicked off 1Q17 with RM1.18 billion in net profit (+45% y-o-y, +38% q-o-q), in line with house estimate but outperforming the street’s.

In a note today, the research house said key surprises are mainly the robust topline income growth driven by a 10bps increase in NIM yoy, strong loan growth in Malaysia, sharply higher investment gains and credit cost of 52bps, which came in below management’s guidance.

“Further improvement in asset quality (as NPLs had peaked in 4Q16) and operational synergies from the JV with China Galaxy are possible catalysts for further upside to our 2017-19E forecasts.

“Maintain Buy, price target raised to RM7.00 from RM6.30,” it said.

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