Hong Leong Bank / Quek Leng Chan

[winston]

Quek the contrarian

by Joyce Goh

07 September 2010


KUALA LUMPUR: Tan Sri Quek Leng Chan, the cigar-chomping billionaire who is known for his well-timed investment strategy, is bullish on the stock market if the forecast of his flagship Guoco Group Ltd on the global economic outlook is anything to go by.

The financials of the Hong Kong-listed Guoco Group, based on the latest financial statement for the period ended June 30, 2010, showed that its cash holding is the lowest since 2002. Out of its holdings of HK$24.82 billion (RM9.96 billion), HK$18.41 billion or 74% is invested.

This comes at a time when stock markets around the world are going through a period of uncertainty amidst fears of the global economy sliding into a recession again, just after recovering from the one in 2007-2008 brought about by the subprime mortgage crisis in the US.

In the notes accompanying the financial statement, Guoco, which is Quek's investment holding company, is not too worried of a possible double dip.

We intend to deploy more funds to expand our investment portfolio, and to build up core businesses through organic growth and mergers and acquisitions, it noted in its financial results announcement on Aug 27.

Whether the world will undergo a renewed contraction is unclear. With continued accommodative government policies and near-zero interest rates, we believe the global economy is unlikely to plunge into a double-dip recession, it added.

In tandem with the bullish outlook, Guoco's trading financial assets jumped 550% to HK$18.14 billion as at June 30, 2010 from HK$2.79 billion a year earlier.

Quek appears to be bullish on the stock market with his investment holding company Guoco saying it intends to deploy more funds to expand its investment portfolio.

Quek appears to be bullish on the stock market with his investment holding company Guoco saying it intends to deploy more funds to expand its investment portfolio.

The Hong Kong-based investment holding company also saw its available-for-sale financial assets rise to HK$5.97 billion in June 2010 from HK$2.99 billion, or a 100% increase.

Meanwhile, Guoco's cash and short-term funds have decreased in tandem with the rise in its investments. As at June 30, 2010, the group's cash and short-term funds have declined by 72% or HK$16.4 billion year-on-year to HK$6.4 billion.

Did Quek believe this was a good time to start deploying Guoco's cash for investments in the market?

It is no secret that the Guoco group has been sitting on a healthy pile of cash. After all, it has been cash-rich since selling Dao Heng Bank to DBS Bank in 2001for US$5.4 billion (RM16.79 billion). At that time the sale of Dao Heng was valued at 3.5 times book value.

Judging from Guoco's recent results, it looks as though its investment strategy has borne fruit. For the financial year ended June 30, 2010 (FY10), the group's core business which is principal investment registered a profit before tax of HK$1.75 billion compared to a loss before tax of HK$589.2 million in FY09.

Guoco's investment strategy has had a good run. Profits from its principal investment division averaged about US$230 million (RM715.3 million) each year from FY02 to FY05 and jumped to US$636.49 million in FY06 due to the stock market bull run.

Interestingly, the investment holding company made an exit as early as the middle of July 2007, which was right before the global financial crisis hit the markets.

When the going was getting tough in 2007, the Guoco Group quickly scaled down its exposure to the stock markets. The amount of its trading financial assets was reduced from HK$9.19 billion as of June 2007 to HK$5.86 billion as at December 2007, which translates into pulling out 36% of its funds, in just six months.

Despite the sterling performance of its investment portfolio for the years 2002 to 2008, Guoco Group's cash pile has remained stable at the HK$22 billion range. This is because the group has been generous with its dividends. For the financial years 2002 to 2009, it paid out a total of US$751 million in dividends.

Aside from its principal investment business, Guoco Group also has a 65.2% stake in a property development arm GuocoLand Ltd and a 65.5% stake in GuocoLeisure Ltd as at June 30, 2010. Both the companies are listed in Singapore. The Guoco Group also has a 25.4% stake in Hong Leong Financial Group, which controls 64.4% of the sixth-largest bank in the country, Hong Leong Bank Bhd.

Quek, 66, has been in the driving seat of the Guoco Group all this while. He is its executive chairman, a position held since 1990, and is also the chairman of the board remuneration committee of Guoco.


Source: The Edge Financial Daily

[winston]

Malaysia's Richest
#5 Quek Leng Chan
05.26.10

His most valuable asset is his Hong Kong-listed Guoco Group

Net Worth $3.85 billion
Age 69
Marital Status Married, 3 children
Source diversified

His most valuable asset is his Hong Kong-listed Guoco Group. His Hong Leong Bank is bidding for EON Capital, Malaysia's seventh-largest bank; board just voted to recommend deal to shareholders.

Took Hume Industrie cement, concrete, steel company private this year.

Recently paid $14 million for a penthouse in Singapore.


http://www.forbes.com/lists/2010/84/mal ... _S1DG.html

[Poles]

November 22, 2010

HLI's proposals to exit semiconductor business, reward shareholders

By Sharidan M. Ali

PETALING JAYA: The Hong Leong group, helmed by elusive tycoon Tan Sri Quek Leng Chan, has never been quiet in terms of corporate deals and the latest is Hong Leong Industries Bhd's (HLI) proposed acquisition of the entire equity interest in Hume Industries (M) Sdn Bhd (HIMB) from Hong Leong Manufacturing Group Sdn Bhd (HLMG).

Quek's ability to buy low, then grow a particular company and sell it for a handsome profit is an approach he has honed over many years.

To recap, in 2001, Quek netted RM11.5bil the highest price paid for an Asian bank by selling his controlling stake in Dao Heng Bank of Hong Kong to Singapore-run DBS Bank.

In 2006, the tycoon was the mastermind behind the sale of global air-conditioning maker OYL Industries Bhd to Daikin Industries Ltd of Japan in a deal worth RM7.6bil.

Recently in April, he took Hume Industries Bhd private for RM238.5mil or RM4.50 per share.

Going forward, Hong Leong Bank under the group, will become the fourth largest bank in Malaysia if the RM5.06bil cash deal to take over EON Capital Bhd goes through. The deal is now delayed by a court case following a dispute between EON Capital shareholders.

Next in the pipeline could be the privatisation of Southern Steel Bhd, in which the Quek family now holds a majority stake.

Back to HLI, the company entered into a conditional share sale agreement on Nov 16 with HLMG to buy HIMB for RM235.2mil to be paid for via the issuance of 46,759,443 new HLI shares.

Simultaneously, HLI also announced it had entered into a conditional subscription agreement with Hume Cement Sdn Bhd and HLMG for the proposed subscription of up to 175 million six-year 2% non-cumulative irredeemable convertible preference shares (ICPS) in Hume Cement at the par value of RM1 each to be satisfied by cash.

Upon completion of the proposed acquisition, HLI proposes to undertake a one-for-two rights issue of up to 159,736,405 new HLI shares at an indicative issue price of RM1.45 per rights share.

HLI also proposed to distribute up to 119,802,303 shares in Malaysian Pacific Industries Bhd (MPI) to HLI shareholders on the basis of 75 MPI shares for every 300 HLI shares held upon completion of the proposed acquisition and proposed rights issue.

According to a fund manager, these corporate exercises strongly indicated Hong Leong group's attempt to exit the semiconductor business as well as to focus and expand on its building materials business that promised brighter prospects.

MPI is currently not at the forefront of the industry like it was back in 2000 during the dotcom era. Thus, this is a way for Hong Leong to exit the company, he said.

A recent CIMB Research report anticipated a more tepid outlook for MPI.

We expect MPI to see a mid single-digit quarter-on-quarter contraction in revenue as it anticipates some pullback in the second quarter ending Dec 31 due to short-term inventory correction and ongoing weakness in the computing segment.

Based on its limited foresight now, MPI is expecting a fairly flattish topline for its third quarter which is also seasonally its slowest quarter.

The fourth quarter should see some snapback as seasonality will start to kick in, said the research house.

On the acquisition of HIMB, the fund manager said prospects of the building materials business would be quite bright due to multi-billion ringgit construction projects planned by the Government in the next 10 years.

HLI said the proposed acquisition would enable the company to expand its building materials business as HIMB was involved in the manufacture and sale of concrete and related products, cellulose fibre cement products and concrete roofing tiles which were complementary to HLI's existing building material business.

Also, upon full conversion of the ICPS and assuming HLMG exercised its entitlement to capitalise on the RM55mil owed to it, Hume Cement would be an approximately 75%-owned subsidiary of HLI.

Pursuant to the terms of the subscription agreement, HLMG would be entitled to capitalise up to RM55mil of shareholders' advance into ordinary shares in Hume Cement.

Thus, the fund manager said HLI's proposals were somewhat complete for its purposes to exit the semiconductor business, reward its shareholders, reduce borrowings and expand the business that had brighter prospects.

Source: The Star

http://biz.thestar.com.my/news/story.as ... c=business

[iam802]

...

According to a fund manager, these corporate exercises strongly indicated Hong Leong group's attempt to exit the semiconductor business as well as to focus and expand on its building materials business that promised brighter prospects.

...

Personal observation. I do see businesses expanding on these fronts through my various contacts.

There seems to be some underlying demand in this area. But, I am not able to vocalize (as in I do not understand) what is the pull or push factors.

[Poles]

...

According to a fund manager, these corporate exercises strongly indicated Hong Leong group's attempt to exit the semiconductor business as well as to focus and expand on its building materials business that promised brighter prospects.

...

Personal observation. I do see businesses expanding on these fronts through my various contacts.

There seems to be some underlying demand in this area. But, I am not able to vocalize (as in I do not understand) what is the pull or push factors.

my guess the margin for semiconductor end product is really pathetic. It becomes a volume business....everyone is selling notebooks.
Capital investment cost is too high to get good profit....unless the branding comes in like Apple.

I guess the world is in a deep shit & low margin electronic consumer products cannot help to roll the world.....the other alternative "roll method" will be government spending on infrastructure building....hence building material?? Tio Bo??? which counter then??

[winston]

Not Vested.

Valuation/Recommendationï‚·

Maintain BUY with target price of RM13.70. We like HLB for its transformation strategy, going for stronger growth from more aggressive organic expansion.

The new HLB is likely to leverage on the enlarged network to continue its aggressive and innovative growth strategies to capture a larger market share and build up a regional presence to have more significant contributions from its overseas operations (Singapore, China and Vietnam).

Source: UOBKH

[winston]

Not vested

Hong Leong Bank [HLBK MK] - Buy : 3QFY11 meets Nomura estimates( RM11.5 / PT: RM11.7 ) Julian Chua

Hong Leong Bank's 9MFY11 earnings at RM838mn met Nomura's (FY11F: RM1,109mn) and consensus (FY11F:1,095mn) estimates, continuing the trend established in 2QFY11.

On a q-q basis, loan growth was 2.4% (industry: 3.2%), with LDR increasing to 59.4% (2Q:58.6%), while management succeeded in keeping NIMs stable.

Asset quality improved with the NPL ratio improving to 1.9% (2Q: 2.1%).

We believe consensus will be upgrading estimates, which should be a positive for the stock. Maintain BUY.

Source: Nomura

[winston]

Not vested

Hong Leong Bank: Post-acquisition update( RM12.2 / PT: RM14.1 ) by Julian Chua; Manjith Nair

Action: BUY reaffirmed, TP lifted

With the completion of the EON Bank acquisition, we raise our target price for Hong Leong Bank to MYR14.10.

Our cum-rights issue EPS estimates for FY11F-13F are raised by 3-37%.


Source: Nomura

[Poles]

Quek is the Man.....only buy at his price!! ang mo LL!!

http://www.telegraph.co.uk/finance/comm ... eover.html

There is something rank about bingo group's 'accidental' takeover

[tonylim]

Quek is the Man.....only buy at his price!! ang mo LL!!

http://www.telegraph.co.uk/finance/comm ... eover.html

There is something rank about bingo group's 'accidental' takeover

Is this deal benefiting Guoco Leisure ?