CIMB Group (HOLD)

Cautiously Optimistic

'''' 3QFY12/11 results in line with HLIB and consensus.

'''' Results boosted by strong rebound in treasury and investment division and lower tax.

'''' Difficult to meet 17% ROE KPI but consensus and HLIB numbers achievable.'' May fall short of loans and deposits KPIs but within HLIB conservative assumptions.

'''' Relatively positive about 2012 loans growth and expect CASA growth to partly mitigate NIM compression.'' See opportunity to expand NIM from further shrinkage of US$ funding in the region pending EU debt crisis outcome.

'''' 2012 equity pipeline good (delays from 2011) while M&A, bonds, Fx and rates markets to remain active.

'''' Asset quality ratios improved but absolute IL increased.'' However, do not expect the impact of rise in delinquencies to be significant.'' Expect CA/net loans to decline to industry pees level by 2H2012.

'''' Basel III bank level core equity ratio at 9.2%.

'''' No investments in EU, small derivatives cash collateralized.

'''' No change in dividend policy given ample capital.

'''' Maintain HOLD with unchanged target price of RM7.20.

''

TdC (BUY)

Financing the Wedding

'''' TdC has announced its acceptance of term loan facilities granted by CIMB Bank Bhd (Bursa Malaysia).

a.'' Term Loan Facility to TdC amounting to RM22.5m with the purpose to refinance the existing borrowing of AIMS Data Centre 2 SB, The AIMS Asia Group SB and its subsidiaries and AIMS Cyberjaya SB.

b.'' Term Loan Facility to TT dotCom SB, a wholly-owned subsidiary, amounting to RM88m with the purpose to advance funds to TdC to acquire GTL and AIMS Group.

'''' Comments: We take this announcement positively as TdC has achieved another important milestone towards its acquisitions.

'''' We foresee strong and solid synergies between TdC and its acquiring targets offering one-stop solution to customers' ICT requirements, from hosting services to connectivity which is globally expanded.

'''' Additionally, TdC would probably benefit from the recently announced digital cable TV initiative by Asian Broadcasting Network which is set to take off in 2Q12. TdC may enter into collaboration similar to the existing one with Astro.

'''' Maintain our Buy call with a higher SOP target price of RM0.82 from RM0.81 as we imputed our DiGi target price (instead of market price). Based on DiGi's latest price, it could add 4 sen to our SOP.

''

Crucial support near 1452-1467 pts

'''' Technically, daily trend and momentum indicators are weakening and are pointing to more consolidations. Immediate resistance levels remain at 100- d SMA (now at 1487) and 200-d SMA (1508), followed by 1530 (23.6% FR). Downside supports are mid Bollinger band (1467), 1452 pts (3 Nov intraday low) and 30-d SMA (1445 pts).

''

Range bound trading within the box

'''' On top of focusing Europe's debts issues, investors are likely to shift its attention towards a congressional committee decision on further deficit-reduction measures by 23 Nov and raise the debt ceiling into 2013. Hence, pending the outcome, we believe the Dow will continue in range bound consolidation. Immediate resistance levels are 12300-12500 levels while supports are near 11500-11700.