Hong Leong Finance

[winston]

HLF achieves 42.5% rise in FY09 net profit By ANGELA TAN

SINGAPORE - Hong Leong Finance reported on Wednesday that net profit for 2009 rose 42.5 per cent from a year ago to $111.18 million (US$78.90 million), equivalent to 25.26 cents a share.

The results for the year were arrived at after charging provision for the settlements relating to wealth management products distributed and allowances for doubtful debt amounting to $24.4 million compared to $55.5 million a year earlier.

The finance company said there is an estimated $13 million overprovision for the cost of settlements related to the Minibond series to be written back in the first quarter of 2010.

It is proposing a final dividend of six cents a share for 2009.

Source: Business Times

http://www.businesstimes.com.sg/sub/lat ... 54,00.html?

[winston]

RESEARCH ALERT-DMG raises Hong Leong Finance target price

SINGAPORE, Feb 25 (Reuters) - Following is a list of stock price target changes and rating changes.

COMPANY RIC BROKER RATING (PVS) TARGET PRICE (PVS) HONG LEONG DMG BUY (BUY) S$3.50 (S$3.33) FINANCE STATEMENT: Hong Leong Finance reported 2009 net profit of S$111 million ($78.78 million), up 43 percent year-on-year. This is lower than our S$117 million forecast, largely due to higher provisions. Fourth quarter net profit was S$25 million, a reversal from previous year's loss of S$14 million.

Preprovisioning operating profit of S$38 million, though marginally lower than S$41 million in the fourth quarter of 2008, remains respectable. We raise our 2010 financial year net profit forecast by a marginal 5 percent to S$135 million. Maintain BUY on Hong Leong Finance, with a higher target price of S$3.50 from S$3.33 previously.

[winston]

From Lim & Tan:-

A Pity S$2.98-HLFN.SI

It is a pity that HL Finance may have turned a little too bearish in 2009, as reflected in the 17% decline in loans & advances to $6.14 bln in Q4, from $7.41 bln a year ago. (All the 3 banks posted loan growth, albeit moderately.)

Otherwise, with deposit rates slashed (reflected in the sharp drop in interest expense), and provisions sharply reduced, HL Finance’s net profit would have resumed growing, and not actually declined, as it did in Q4, down 7% from a year ago at the profit before gains & allowances level.

Another way of looking at it: net interest income, which was rising steadily through H1’09, fell to $26 mln in Q4 ’09 from $28.9 mln in Q2 ’09.

(Hire purchase financing, HL Finance’s main business, is not a function of interest rates, as borrowers would have been “locked in” for the tenure of the loan.)

And as a result, HL Finance could only pay final dividend of 6 cents per share, for a full year total of 8 cents, which at $3.03 = only 2.6% yield. One of HL Finance’s attractions has traditionally its high yields.

One could take the view that HL Finance’ would be working hard to grow its loan books, and at 9% discount to book NAV of $3.34 (bank stocks are all at premiums), a BUY can be justified. Besides, Q1 ’10 will see the write-back of $13 mln (or 2.9 cents per share) relating to the Minibonds saga.

However, after the disappointment. we believe there is no hurry. The stock may be worth another look at the $2.70-2.80 range.

[winston]

From UOBKH:-

Valuation/Recommendation

HLF trades at a P/B of 0.85x and at a discount of 14.8% to our 2010F NAV/share of S$3.44.

While growth has slowed, asset quality remains pristine and 65.6% of NPLs are backed by collaterals.

Our target price is S$3.24, based on a P/B of 0.94x derived from the Gordon Growth Model (ROE: 7.8%, required return: 8% and constant growth: 4.5%).

[millionairemind]

Published August 12, 2010

Hong Leong Finance Q2 net rises 15% to $32 million

HLF declares interim dividend of four cents per share

By MELISSA TAN

HONG Leong Finance (HLF) yesterday posted a $32 million net profit for its second quarter ended June 30, a 15 per cent gain year-on-year, despite an 8.7 per cent drop in income before operating expenses to $52.9 million from last year's near-$58 million.

Earnings per share were 29.08 cents, up from 25.29 cents last year.

The company said Q2 interest expenses fell $6 million, a 26.4 per cent decrease from last year, due to 'lower prevailing interest rates and a lower deposits base'.

Net loan assets including hire-purchase receivables stood at $5,932 million at June 30. This was a 3.3 per cent decrease from $6,137 million at Dec 31, 2009, and an 11.5 per cent decrease from $6,704 million at June 30, 2009.

HLF said it has 'developed new customer relationships' with SMEs through taking part in government initiatives to help the enterprises.

The company also said it has 'actively supported the HDB home loans market by rolling out various alternative structures at competitive pricing'.

Noting that the current 'high short-term liquidity' in the market is causing a 'lag in the expansion of (its) lending portfolio', HLF said it will 'maintain strict credit parameters'.

It plans to 'focus on serving the retail HDB market for deposit placements' through 'competitive deposit packages' in the second half of the year.

A tax-exempt, one-tier interim dividend of four cents per share, to be paid on Sept 15, has been declared.

HLF shares fell two cents yesterday to close at $3.11.

[winston]

Not vested. From Lim & Tan:-

• HLF’s performance in Q3 continues to disappoint: net profit fell 22% to $25.385 mln, a sharp contrast from the banks.

• While the contraction of the car hire purchase business is a “reasonable” excuse, HLF’s push into SME sector has clearly not yielded any results.

• Loans & Advances, at $6103.53 mln at end Sept’10, are still lower than $6136.99 mln at end’09, which was down sharply from $7412.92 mln at end 2008. And net interest
Income dropped 15% to $47.40 mln.

• Assuming unchanged final dividend of 6 cents, full year total will be 10 cents, giving a yield of 3.2%.

• While trading at 0.89x book of $3.46, investors would be better off switching to bank stocks.

• We maintain HLF may be worth a look again at $2.70-2.80.

[winston]

Not vested. From Lim & Tan:-

The valuation of GE Money (operating under the James brand) seems rich , and serves to underscore Hong Leong Finance’s “cheapness”.

HL Finance ($3.04 yesterday, down 3) has a market cap of $1.34 bln, and loan books of $6.2 bln as at end Sept ’10.

Therefore, while the news will likely highlight HL Finance’s long-standing undervaluation, any boost to HL Finance’s share price may not be sustained.

Key reason being Mr Kwek Leng Beng is unlikely an eager seller of HL Finance, given the Hong Leong Group’s >30% stake (source: Bloomberg).

The longstanding undervaluation helps explain the presence on the share register of institutional / value funds like Credit Suisse (5.01%), Matthews Int’l (3.32%) and Aberdeen, with 1.82%. (Note Aberdeen is now part of Credit Suisse.)

We last downgraded HL Finance to a HOLD in Nov ’10 in (share price then around $3.10) largely on the back of the steady decline in HL Finance’s loan book, which stood at $7413 mln at end’08 and $6137 mln a year later.

We are maintaining our call.

http://www.remisiers.org/cms_images/25012011dailyex.pdf

[winston]

Not vested. From DMG:-

HLF is trading at an attractively low P/B.

We spoke with management recently. Management said their efforts to drive loans have led to a 4Q10 sequential loan increase.

Though FY10 net interest margin is under pressure (due to competitive interest rates), we believe further squeeze is quite unlikely – we forecast continued soft SIBOR for at least the next six months, which should help to keep funding costs low.

Further FY11 loan growth would drive preprovisioning earnings.

Maintain BUY on HLF as valuation remains attractive. Our target price of S$3.61 is pegged to 1.0x 2011 book (7-yr historical P/B is 1.0x).

[Poles]

anyone following this?? it is at 52week low...$2.80

[iam802]

just thinking... will they be able to increase the loans

does the property market has an impact on their business?

Personally, I think there's no hurry to scoop this up.