- We maintain our BUY rating on CIMB Group Holdings (CIMB), with an unchanged fair value of RM6.30/hare. This is based on a revised FY15F ROE of 11.2% (vs. 11.4% previously), leading to a fair P/BV of 1.3x (vs. 1.4x previously).

- CIMB announced that the issue price of the new shares to be issued pursuant to the dividend reinvestment scheme (DRS) for the Second Interim Dividend has been fixed yesterday at RM5.51 per share.

- The Issue Price represents a discount of approximately 5% to the theoretical ex-dividend price of RM5.80 per CIMBGH Share, which was arrived at after taking into consideration the following: (i) five market day volume weighted average market (VWAMP) price up to and including 16 March 2015, being the last trading day prior to the Price Fixing Date of approximately RM5.85 per CIMBGH share and; (ii) dividend per share of 5.00 sen per CIMBGH share based on the number of issued and paid-up share capital of CIMBGH of 8,423,746,385 CIMBGH shares as at 31 December 2014.

- The discount of 5% to the VWAMP is similar to previous historical tranches (see table in following page).

- The entitlement date pursuant to the Second Interim Dividend and the DRS has been fixed for 31 March 2015.

- Barring any unforeseen circumstances, the new shares arising from the DRS will be listed on 29 April 2015.

- Our earnings model has been adjusted for the latest DRS price.

- We reiterate our view that further loan loss provisioning for CIMB Niaga in 1QFY15 is unlikely to be as high as that in 4QFY14. Thus, the worst of the loan loss provisioning trend may be over. Given this, book value should remain intact.

- The stock is currently trading at a P/BV of only 1.3x, below the long-term average mean of 1.7x (see valuation charts in following pages). We maintain our stance that valuations remain compelling for a highly liquid big cap banking stock. Maintain BUY.

Source: AmeSecurities