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Thursday, May 25, 2017

CIMB: Earning Soared!

Results Update

For QE31/3/2017, CIMB's net profit rose 38% q-o-q or 45% y-o-y to RM1.18 billion while revenue rose 1% q-o-q or 17% y-o-y to RM4.36 billion. Four divisions saw better q-o-q PBT contribution:
  • Regional Commercial Banking (494%) due to the higher provisions in Thailand and Singapore in 4Q16
  • Wholesale Banking (30%) due to a stronger performance in corporate banking and improved capital market activity
  • Group Asset Management & Investments (64%) due to absence of investment impairments
  • Group Funding (46%) due to the goodwill impairment in 4Q16 and FX gains
The division with a lower PBT contribution is Consumer Banking and that's because of the absence of its Indonesia bancassurance fees which was recognized in 4Q16.


Table: CIMB's last 8 quarterly results

As a result of the improved performance, we can see that CIMB's bottom-line is now fast approaching the level of profit achieved in early 2014.


Graph: CIMB's last 23 quarterly results

Valuation

CIMB (closed at RM6.13 yesterday) is now trading at a trailing PER of 13.6x (based on last 4 quarters' EPS of 44.79 sen). At this PER, CIMB is deemed fairly valued.

Technical Outlook

CIMB is recovering nicely after testing its long-term uptrend line in early 2016. Its immediate resistance is at RM6.20-6.25. Can it surpass this level to test the next resistance at RM7.00? We will have to wait and see.

  
Chart: CIMB's monthly chart as at May 25, 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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