CMA

CMA: CIMB downgrades to Underperform from neutral, cites concerns over capex commitments and valuations. Cuts TP to $1.15 (35% discount to RNAV) from $1.17.
The house notes CMA has been aggressive in acquisitions, committing to >$2.5b of purchases in 2011; some of its large-scale China invmts have yet to go through formally, with debt obligations yet to show up on its books. Highlights that funding costs have increased substantially, with CMA understood to be paying PBoC rates +20%. Expects CMA’s net gearing to rise from 6% currently, to 50-55% in FY11-13, vs mgt’s guidance for optimum gearing of 60-70%, which provides little margin for comfort. Estimates CMA’s operating cash flows will be unable to cover its devt capex needs in the near future, with pick up to come only by 2013.
Adds, with the recent dual listing in HK, equity raising in 2012 is possible.