Thursday, 25 August 2011

CIMB: Why 2 Long Black Candlesticks?

CIMB has just achieved a record in its 2011Q2 profit. However, its share price fell 54sen (7%) with high volume from RM7.79 to RM7.25 in just 2 days! Why? I also want to know. Generally market sentiment is currently lifted a bit. If no particular devastating bad news, then may be can consider to buy already...??

From Reuters:

CIMB’s second-quarter net profit of RM970.02 million exceeded a JP Morgan forecast, which pegged the quarter’s earnings at RM942 million. 

Eighteen out of 24 analysts tracked by Thomson I/B/E/S have a “Strong Buy” or “Buy” call on CIMB, while five have “Hold” calls. 

     CIMB is facing selling pressure

Perhaps the CEO is too "honest" and pessimistic?


Group chief executive Datuk Seri Nazir Razak said: 

“We had another quarter of record profits in the second quarter, underpinned by a strong uplift from our Malaysian consumer banking operations and continued high growth at CIMB Niaga.

“We are, however, still behind our return on equity (ROE) and balance sheet growth targets for the year as we have been treading more cautiously given the uncertain global environment.”

“We are maintaining our 17% ROE target, but with a cautious outlook, meaning that we are more conservative to risk. We maintain more liquidity, more capital and more diversification of portfolio,” 

Nazir said his caution stemmed from the weakness in Western economies, which were not just volatile, but also diminishing in trust.

This could potentially cause a repeat of 2008 (credit crisis in the United States).

“Right now, India, China and the Middle East are pre-occupied and cannot offset the impact like what they did in 2008,” he said.

“The Asean region is strong, but it doesn't have much fiscal space to offset the deteriorating external outlook. Unlike in 2008, we may not be as immune to that crisis this time.”

Some of the indicators to watch out for would include a more credible debt resolution plan from the Western world, he said, adding that a more concrete plan by the West was absolutely needed.

“Another thing favourable could be a big drop in oil prices which will lower cost to the United States and could be a big boost to the US economy. These are some of the indicators we would be looking at.”

On talk that the Indonesian central bank was to enforce a ruling for foreigners to pare down their stake to below 50%, Nazir said this was the prerogative of the Indonesian government, and if it really happened, then CIMB would abide by the rules. Presently, CIMB holds a 96% stake in PT Bank CIMB Niaga Tbk.

“We will be disappointed if we have to reduce our stake in Bank Niaga, but we hope to be able to continue to fully invest in it. My pre-emptive measure is to pray very hard,” said Nazir.


Is it because of the concern on Indonesia CIMB Niaga's stake? Is it something related to MBF holdings? Is it because of the decreasing revenue despite raised profit? Is it because Maybank has better financial results and dividend payout? Is it just panic-selling? Is it others?

Perhaps CIMB's CEO should talk in KNM's style (dead also can talk until alive).

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