- 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 a 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 1 CIMB share (based on 1 RHB Cap share for every 1.38 CIMB share).

- CIMB recently announced it had, on 29 October 2014, issued and allotted 87.2mil new CIMB shares pursuant to the DRS for the first interim dividend for 1HFY14.

- This is in relation to its interim single-tier dividend of 10sen. The issue price for the new CIMB shares was fixed at RM6.78.

- We estimate that, if assuming all shareholders subscribe to the DRS, the new shares would have amounted to 123mil shares.

- Thus, the take-up or subscription rate works out to be 70.9%, based on our estimates

- The take-up rate is thus lower than earlier tranches, which ranged between 80% to 84% (see table in following page).

- The new CIMB shares were listed and quoted on 30 October 2014.

- With the listing of the new CIMB Shares, the enlarged issued and paid-up share capital of CIMB is now 8,423,750,993 shares.

- The increase in share base is minimal, at only 1.0%. We have fine-tuned our earnings model accordingly.

- There are no major changes to our forecasts. We maintain HOLD.

Source: AmeSecurities