CIMB – Potential Beneficiaries of Budget 2018

Last week we posted a review from Maybank and this is CIMB’s view on the stocks might benefit from this year’s budget revamp.

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CIMB on Bumi Armada Oct 2017

Well we still like Bumi Armada compared to other operators such as Sapura Energy. We think that the future prospect for Bumi Armada could be considered neutral but the current premium that it is trading is much cheaper than other operators.

But this report from CIMB gave us the heads up from this paragraph.

Bumi Armada Berhad (BAB) may need rights issue, on top of partial Olombendo stake sale

So I guess the weakness in terms of the stock price not moving with the increase in the price of crude comes with the reason of analyst anticipating a rights issue ahead. We would love to acquire after the stock goes Ex. Simple as that!

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CIMB Navigating Asia Pacific

Asia Pacific is so vital in China’s plan of One Belt One Road (OBOR) policy. Most of the major corporations in China had already kickstarted the OBOR craze positioning themselves for this wave to sweep them to new locations.

Chinese government is still under communist style economy which is a good thing when they initiated the OBOR policy. It will be done no matter what, simple as that!

Take a look the the latest Navigating Asia Pacific report by CIMB which encompasses how to strategize anticipating this policy.

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Another Quarter Another Feel Good Factor

Our high conviction stock post results for Q 2018 and in our view its not that satisfactory coming below our expectation. But the feel good factor comes knowing that there isn’t any deep selling done after a not so well quarter.

Institutions are buying recently with the names of Amanah Saham Bumiputera grabbing the stocks in bulk and this proves in fact showed that price to earnings would remain high with these institutional bodies on board.

If you have bought at a lower price to earnings premium then it is safe to say the asset you are holding on had been re-evaluated in terms of quality.

As attached, Maybank and CIMB reported and recommended a HOLD/Reduce rating for the stock. Since it falls on our high conviction target we are aggressive and holding on tight in return leveraging on this company’s growth.

Technicals

Meanwhile the chart is showing us chances of a break over RM 5.00 with an ascending triangle in the making. A rough drawn triangle following the upward sloping line marks somewhere just before Nov to determine where it would head.

Coincidentally, it would be near to next quarter’s earnings release. We recommend buying on dips for this stock.

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Report

Click for Report

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CIMB on Malaysian Healthcare Sector

We agree with the recommendation for IHH but we still felt that this is the stock that isn’t worth buying when the price is consolidating. We prefer to buy IHH on dips during weak market times somewhat like today.

Valuation remains high for hospital operators but it is still a good business to invest in with REIT like exposure coupled with strong growth in the long term.

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CIMB Downgrades Malaysian Banks

The argument for the downgrade refers to the implementation of Malaysian Financial Reporting Standards (MFRS) 9. Somewhat similar to CET1 ratio, the provision methodology would change under MFRS 9.

It was estimated that under MFRS 9, it would negatively impact the net profit of banks in the future.

See the full report below including sensitivity analysis of respective banks.

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