Friday, 26 August 2011

CIMB Below Forecast?

In a bear market, good news are generally ignored. Investors do not react much to good news, but tend to react excessively to bad news.

For CIMB, it seems like there is no single special reason for its recent dive in share price. It's below RM7 today, a psychological support? The major concern seems to be the slower than expected growth, which does not meet some people's forecast, and of course the Indonesia issue may also weigh in.

Anyway, EPF and Mitsubishi Financial group are accumulating CIMB's shares in August.

Everyone is waiting for Bernanke's speech today.


KUALA LUMPUR: The stock of Malaysia's number two lender took a beating yesterday, closing 4.6 per cent down to a one-year low of RM7.25, on concerns of slower growth this year.

Analysts said as the stock has a lot of foreign owners, it was no surprise that there were more sellers than buyers since Wednesday, despite CIMB Group Holdings Bhd's record second quarter earnings on Tuesday.

"It is similar to Axiata's stock. Axiata also has high foreign shareholding and it suffered the same fate," said one analyst.

The analyst said since CIMB has always commanded a high valua-tion, a slight concern over its performance can easily affect the stock price.

CIMB's earnings rose 9.1 per cent to a record RM970.01 million in the second quarter ended June 30 2011 from RM889.46 million a year ago.

Despite that, it was considered to be still 9.2 per cent below the consensus of most analysts.

They attributed the sell down of the stock to mostly concerns over slower loans and non-interest income growth.

MIDF Research for one has cut CIMB's earnings forecast for 2011 by 6 per cent due to the low loan growth.

OSK Investment Bank equity capital market head Gan Kim Khoon said CIMB's results were below the expectations of many.

"And there are concerns over its stake in Indonesia's Bank Niaga as CIMB has got more to lose with the new ruling compared to Maybank," he said.

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