Wednesday, 9 May 2012

CIMB up on plans to acquire Philippines bank stake

KUALA LUMPUR (May 9): CIMB Group Holdings Bhd shares advanced on Wednesday after it entered into conditional share purchase agreements (SPA) with San Miguel PROPERTIES [] Inc, San Miguel Corporation Retirement Plan and various minority shareholders for the proposed acquisition of 60% of Bank of Commerce (BoC) in the Philippines.

At 9.15am, CIMB was among the top gainers and added eight sen to RM7.71 with 1.82 million shares traded.

In a statement on Tuesday, CIMB said the acquisition was for the equivalent of RM881 million cash.

MIDF Research maintained it Neutral rating on CIMB with a target price of RM7.70 and said the deal would be neutral to its financials in FY12 with only 3 to 4 months of consolidation impact after its completion in 3QFY12.

“Even in FY13, we do not expect a significant earnings accretion as the cost-to-income ratio for Group is likely to inch up marginally due to investments in IT infrastructure and human capital for its expansion to Philippines.

“It is also expected that the provisioning in BoC post acquisition to be raised to align to the provisioning policies of CIMB Group. Our TP implies a marginal 0.9% upside from the current share price. Hence we maintain our Neutral call,” it said in a note May 9.

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