Hong Leong Bank Berhad
Date: 27 Feb, 2025
Results Update
Q4 Ending: 30/6/24
Analysts:
Nabil Thoo
David Chong CFA
Target Price: RM26.60
Rating: Buy
FY2025 Forecast:
Net Profit: RM4,365m
EPS: RM2.13
DPS: RM0.76
Hong Leong Bank’s 1HFY25 results were in line. Home operations once again put up a strong showing, further reducing the group’s reliance on associate Bank Of Chengdu (BOCD). Management also appears to be keen on accelerating dividend payouts – though incremental yields (+0.1-0.4ppts) are notsubstantial, this now adds a capital management dimension to our thesis on the counter, ie solid fundamentals and attractive valuations.
Date: 27 Feb, 2025
Results Update
Q4 Ending: 30/6/24
Analysts:
Keith Wee Teck Keong
Target Price: RM23.60
Rating: Buy
FY2025 Forecast:
Net Profit: RM4,552m EPS: RM2.19
DPS: RM0.765
HLBank’s 1HFY25 earnings were in line, driven by improved NIM, positive Jaws, strong loans growth and robust trading income. Excluding Bank of Chengdu, HLBank’s PBT (72% of group PBT) grew a solid 10.3% yoy. Its current valuation of 1.06x P/B is attractive vs the sector’s 1.24x despite generating higher ROEs. We view the stock as an attractively-valued high-quality laggard within the sector. Maintain BUY and target price of RM23.60 (1.22x FY25 P/B, 11.5% ROE).
Date: 26 Feb, 2025
Results Update
Q4 Ending: 30/6/24
Analysts:
Desmond Ch’ng, BFP, FCA
Target Price: RM24.30
Rating: Buy
FY2025 Forecast:
Net Profit: RM4,548m EPS: RM2.22
DPS: RM0.78
BOCD’s contributions to group earnings are expected to reduce over time, as a) HL Bank’s stake has diluted to 17.8% from 19.8% before and b) ex BOCD earnings gather pace (+10.3% YoY in 1HFY25). Moreover, the group’s dividend payout ratio is expected to improve over time. BUY with an unchanged TP of MYR24.30 (COE: 10.3%, g: 3.5%, ROE: 11.7%). Forecasts are maintained.
Date: 27 Feb, 2025
Results Update
Q4 Ending: 30/6/24
Analysts:
Tan Ei Leen
Target Price: RM25.40
Rating: Buy
FY2025 Forecast:
Net Profit: RM4,635m EPS: RM2.26
DPS: RM0.79
HLB achieved RM2.2bn in 6MFY25 net profit (+5.7% yoy), underpinned by a robust 13% yoy growth in operating income, led by: i) a 31.4% yoy jump in non-interest income (through wealth management, bancassurance, Global Markets sales and realizing gains in FVTPL/FVOCI instruments); and ii) an impressive growth of 8.3% yoy in fund-based income, with loan growth at 7.7% yoy. The robust 6MFY25 operating income growth also yielded a positive +2.5% JAWS and HLB was able to maintain its CIR (6MFY25: 38.8%) below its target of ~41% for FY25, prior to management’s revised target of ~40%. A very minimal net credit charge (as a result of recoveries) was another driver. Sequentially, NIM saw a slight dip of 2bps qoq to 1.9% due to year end competitive pressure on deposits, after 6 consecutive quarters of recovery, driven by effective Asset-Liability Management (ALM) through deposit cost optimization, building CASA (ratio holding up at 31.3%) and expansion into the more profitable lending segments such as businesses/SMEs.
CORPORATE DEVELOPMENTS
3 Feb 2025
Public Bank Bhd’s upcoming Q4 results, scheduled for release on 26/2/25, are expected to reflect the financial impact of the goodwill impairment at its 73.2%-owned subsidiary, Public Financial Holdings (PFH), which had recorded a goodwill impairment on its wholly owned subsidiaries, Public Bank (HK) Ltd, Public Finance Ltd, and Winton (BVI) Ltd. The impairment was approximately HK$810 million or RM463 million. (Source: TheEdge)
4 Dec 2024
On 10/10/24 it was reported that Public Bank Bhd would acquire 44.15% stake in LPI Capital for RM1.72bil by launching a Mandatory General Offer for LPI at RM9.80/share. Teh Li Shian Diona, daughter of the late Tan Sri Dr Teh Hong Piow also announced that the Estate and Consolidated Teh Holdings Sdn Bhd intended to undertake a restricted offer for sale of a portion of their Public Bank shares over a 5-year period, in compliance with the Financial Services Act. The acquisition of 44.15% in LPI Capital (175.9 million shares) was completed on 4/12/24. (Source: TheStar, TheEdge)