- We maintain our HOLD rating on CIMB Group Holdings Bhd (CIMB) with an unchanged fair value of RM6.85/share. This is based on our unchanged ROE estimates of 11.9% for the enlarged RHB Cap entity, which leads to a fair P/BV of 1.3x and fair value of RM9.50/share for RHB Cap’s enlarged entity.

- Our CIMB’s fair value is derived after applying a share swap ratio of 0.72 RHB Cap share for every 1 CIMB share (based on 1 RHB Cap share for every 1.38 CIMB share).

- Further details on the mega-bank merger were provided at our recent company visit.

- The proposal has been submitted to Bank Negara Malaysia (BNM) and is awaiting approval. There is also concurrent engagement with other relevant regulatory authorities in the region.

- The sale and purchase agreement is expected to be signed in January 2015 once the necessary regulatory approvals are obtained. The company does not foresee any major changes in the details of the merger.

- The next item on the agenda would be shareholders’ approval at EGMs, followed by a court order to transfer the assets and liabilities by mid-2015.

- In terms of CIMB’s 3Q performance, we expect a quiet quarter given the generally soft capital market conditions.

- The treasury and fixed income continued to be affected by low volatility.

- Although the pipeline of mandates remains healthy, a couple of these have been deferred due to the soft market conditions.

- All in, we expect the Malaysian operations to remain stable, while there are likely to be ongoing challenges for the Indonesian operations.

- We maintain HOLD.

Source: AmeSecurities