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Wednesday, March 08, 2017

CIMB: Next Upleg Has Begun

Results Update

CIMB's result for QE31/12/2016 (4Q16) was released on February 28. That quarter saw CIMB's net profit dropped 16.5% q-o-q but rose 3.5% y-o-y to RM854 million. Revenue rose 4.6% q-o-q or 6.7% y-o-y to RM4313 million.


Table: CIMB's last 8 quarterly results

We can see from the graph below that CIMB's quarter;y financial performance dipped. The 4Q16 revenue or operating income was 4.6% higher, with net interest income growing 7.9% and partially offset by a 2.3% decline in non-interest income. The 4Q16 net profit was 16.5% lower q-o-q due to the PT Sun Life gain of RM150 million in 3Q16 and improved net interest income, partially offset by higher provisions from Thailand.

Consumer Banking PBT rose 6.9% q-o-q largely on the back of regional loans growth and an improved performance in Indonesia. While the Regional Commercial PBT was 136.9% lower q-o-q due to higher provisions in Thailand and Singapore. Wholesale Banking PBT improved 28.4% q-o-q underpinned by a stronger performance in corporate banking. GAMI PBT was 54.1% lower q-o-q due to investment impairments, while Group Funding PBT was 80.8% lower q-o-q mainly due to the gain from the sale of PT Sun Life recognized in 3Q16.


Graph 1: CIMB's last 22 quarterly results

Notwithstanding the slight dip in earnings for QE31/12/2016, CIMB finished FY2016 with a rebound in its earnings. This signals the beginning of its earning growth trajectory ahead.


Graph 2: CIMB's last 12 yearly results

Valuation

CIMB (closed at RM5.45 yesterday) is now trading at a trailing PER of 13.3x (based on last 4 quarters' EPS of 41 sen). At this PER, CIMB is deemed fairly valued.

Technical Outlook

CIMB broke above the resistance from the line connecting the recent peaks (AB) at RM5.20. With this breakout, CIMB's upleg has truly begun.


Chart 1: CIMB's weekly chart as at Mar 7, 2017 (Source: ShareInvestor.com)

Its next resistance will come from the horizontal line at RM6.30.

  
Chart 2: CIMB's monthly chart as at Mar 7, 2017 (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance & bullish technical outlook, CIMB could be a good stock for long-term investment.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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