MIDF says business as usual at CIMB
PETALING: Datuk Seri Nazir Razak’s departure from CIMB Group will not have a negative impact as the group’s fundamentals remain solid.
MIDF Research said in a report that it was neutral on news of the group chairman’s exit as the group could be considered “institutionalised” and does not depend on any one individual.
It noted the group had changed CEOs in 2014 without any negative impact.
On Monday, CIMB Group announced that Nazir, 51, will step down from all positions in the group by Dec 31, 2018. The group will also activate its succession plan to decide on the next chairman and the exact date of handover.
Nazir’s current term is supposed to end in August next year.
Meanwhile, MIDF Research noted that CIMB remained operationally strong. “For example, as at first half financial year 2018 (1H18), normalised 1H18 net profit grew 3.3% y-o-y despite net income declining 5.2% y-o-y as it was moderated lower loan provisions which fell -29.4% y-o-y to RM746mil.
“Also, since the introduction of its T18 initiative, management have managed to contain operating expenditiure (opex). In 2Q18, opex fell for the second consecutive quarter with -2.5% y-o-y (versus -6.8% y-o-y in 1Q18).
“Furthermore, we opine that the group is on track to achieve its FY18 targets, with possible headwinds in terms of income to be moderated by containment in expenses and credit cost.”
The research house reiterated its Buy call on the counter with an unchanged target price of RM7.85.
“At current valuation, we believe that the stock is undervalued given its prospects and have lagged its peers recently.”
Shares of CIMB closed marginally lower by 3 sen to RM6.