KUALA LUMPUR (Jan 14): CIMB Group Holdings Bhd (fundmental score 1.35, valuation score 2.10) fell after investors locked in gains from the stock's substantial rise yesterday.

CIMB was the top gainer,yesterday, after rising 74 sen or 14% to close at RM5.92 as investors viewed positively news that its merger with RHB Capital Berhad and Malaysia Building Society Bhd (MBSB) would likely be called off.

Today, CIMB fell as much as 34 sen or 5.7% to RM5.58 before reducing losses. The stock settled at RM5.73 at 12.30pm with some 17 million shares changing hands.

The eighth most active stock on the exchange was also the fourth largest decliner.

For comparison, RHB Capital fell 13 sen or 1.7% to settle at RM7.67 while MBSB added nine sen or 4.4 to RM2.15.

Yesterday, The Edge Financial Daily reported that the CIMB-RHB Capital-MBSB merger was off and an official announcement was expected before the end of the week.

The Edge Malaysia business and investment weekly (Edge Weekly), in its latest January 12-18 issue, also reported there was a strong possibility the merger could be called off due to the economic landscape becoming tougher, and the fact that RHB Captal was seeking a revision of the terms after the substantial fall in CIMB’s share price since the structure of the merger was first announced on October 9 last year.

Today, UOB KayHian analyst Keith Wee Teck Keong wrote in a report that “we view the merger failure positively as the proposed merger has been a key overhang on the share price performances of both banks (CIMB and RHB Capital).

Wee said UOB KayHian had upgraded CIMB to “hold” from “sell” on  increasing probability of the highly-dilutive merger breaking down.

“We believe CIMB’s earnings outlook for 2015 is (also) likely to remain highly challenging with its 4Q14 and 1Q15 earnings outlook likely to reflect a further deterioration from an already very weak 3Q14 numbers,” said Wee.

The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. A score of 0 means weak fundamentals and a score of 3 means strong fundamentals.

Meanwhile, the valuation score determines whether a stock is attractively valued, calculated based on historical numbers. A score of 0 means valuations are not attractive while a score of 3 means valuations are attractive.