• HLIB has a HOLD rating with an institutional TP of RM4.85. CIMB’s share price had made a strong rebound in the last two months from as low as RM4.49 to a high of RM5.29 before ending at RM5.09 yesterday in anticipation of improving FY17 outlook. While CIMB has charted an encouraging recovery in its earnings, we remain cautious on its near-term outlook due to its exposure in weak operating environment in Singapore and Indonesia, especially in the oil & gas sector. There could be further provision clean-ups in the upcoming 4Q16 results and a more material improvement in overall group provisions is expected to only happen in 2H17. Hence, after a strong 13.4% rally from RM4.49, we expect the stock to consolidate in the near term, with downside support at RM4.83.
   
• Time to take a breather. From a technical perspective, we advocate Take Profit as share prices are likely to retrace back to RM4.83 support in the near term (downside of -5.1%) due to toppish indicators. A decisive breakdown below RM4.83 will trigger further fall towards RM4.66-4.73 levels, which we believe are good entry points. On the flipside, any rebound will see upside capped at RM5.29

Source: Hong Leong Investment Bank Research - 17 Feb 2017