InvestIdeas

RESEARCH ALERT-BNP Paribas cuts Hong Leong to reduce from buy

SINGAPORE, May 28 (Reuters) - BNP Paribas has downgraded its investment rating for Hong Leong Finance to "reduce" from "buy" and cut its share target price to S$3.30 from S$4.50, citing lower loan growth and a weak wealth management business.

"Our recent conversations with management point to slower loan growth ahead and the need to continue to gather more deposits to ensure a liquid balance sheet," BNP Paribas analyst Ng Wee Siang said in a note to clients.

$3.30? Hmm... seems pretty resilient still amid the past week volatility. Anyway, if it falls below $3, means buy again.

See got chance to drop to near NAV. No subprime exposure.
With Kwek's connections in industrial and property, this one should have business, even in recession.
Recently, China Mer Bank pay 3x book value for a small HK bank.
If somebody offer Kwek's 2x book value or $6, for HL Finance, dun know will he sell,

Yep, HL has been pretty steady so far. However, I don't think Kwek will sell HL Finance because it's still mostly a family business.

With the US subprime/financial havoc still hovering around, I had dumped my banking stocks - OCBC and UOB. I still have HLF, but it is not actually a bank, but a finance Company. As for valuation, I compare HLF with the 3 banks. See this for yourself. The P/B are:

DBS - about 1.4
UOB - about 1.6
OCBC - about 1.6, and
HLF - 1.09!!!

So, I am keeping my HLF.

HLF is the only one among the 4 with zero subprime exposure. And, the yield for FY08 is expected to be around 5%. 1H results is just round the corner, and, we can expect another round of good 1H dividends.

what is HLF divdend % ?

do they have pref shares ?

HLF dividends for the last 3 years (include sect 44A tax credits) were as follows:

FY05 - 33 cents
FY06 - 27 cents
FY07 - 18 cents
FY08 - ?

From the data sheets that I was reading from, HLF does not have preference shares.

And, the latest from DMG (dated 8 July 2008)
HLF : Benefiting from SIBOR weakness
A BUY for HLF with TP $5.18.

No one is wiser. Let's just watch which direction it goes.

In HL Finance balance sheet, under property, equipment and vehicles, they owned quite a few shop units, including a piece of freehold land (location unknown??)
I believe all these units are used as its branches, so it is less immune to higher rentals.
And all these properties are being depreciated annually following Kwek's City Dev way of accounting.

However, core business's wise, I think they will face with growth challenges if Singapore runs into recession. Nowadays, HLF is allowed to do IPO, sell insurance and unit trust at its branches, issue cheques to corporate accounts etc. Like a semi-bank already.

Hong Leong's 1H results is out!

A good set of results, with 1H profit up 17.7% as compared to 1H 2007. HLF is paying 5 cents interim dividends.

Does anyone knows where I can get the historical stock chart of HLF from the day it was listed till now? So far only yahoo finance shows up to till year 2001 but HLF was listed in 1981 and I will like to look at the chart from 1981 till now.