Hong Leong Finance

ahkian · Member

RE: Hong Leong Finance

ahkian · Member

From BT 16Feb 2007

DESPITE a 2.5 per cent fall in income before operating expenses, Hong Leong Finance (HLF) yesterday reported a $17.1 million, or 21.6 per cent, jump in net profit to $96.16 million for its full year ended Dec 31, 2006.

The year's results were helped by a $9.74 million reversal/recovery of allowances for doubtful debts and asset impairment - against a charge of $14.9 million for the previous year.

Earnings per share came to 22.04 cents, up from 18.2 cents.

The group's focus on small and medium-sized enterprises (SMEs) and heartlanders paid off as income from interest and hiring charges before interest expense rose 24.4 per cent to $301.2 million.

What also helped was a buoyant economy and property market which saw the group's housing loan packages well received.

Income before operating expenses fell 2.5 per cent to $176.9 million.

Despite a competitive market, Hong Leong Finance said car financing for new and used cars has recently shown improvement.

Loans and advances (net of allowances) grew 2.7 per cent to $6.056 billion from $5.894 billion. Deposits and savings accounts rose 6.6 per cent at $5.46 billion.

Chairman Kwek Leng Beng said the group will continue its focus on the SMEs and heartlanders in 2007, and assist them in achieving their financial goals either with lendings, deposits, investment or advisory services.

He added that Hong Leong Finance will continue to expand its motor vehicle financing portfolio through the offering of innovative packages.

In order to further improve customer service, Hong Leong Finance intends to continue its branch rejuvenation programme and the relocation of selected branches to newer locations in the HDB heartlands.

The group has proposed a special dividend of nine cents a share and a final dividend of 12 cents. At the interim stage, it paid a dividend of six cents.

Details - http://www.hlf.com.sg/invrel/fh/fh2006.pdf
http://www.hlf.com.sg/invrel/fh/chairmanstt2006.pdf

NAV per share = $3.19
2 May 2007 - xd
18 apr 2007 - Approval at agm
18 May 2007 - Div payout

ahkian · Member

Extracted from company's 3Q 2006 report :

http://www.hlf.com.sg/invrel/fh/fh2006q3.pdf

                       Q3'06     Q3'05    9mth'06       9mth'05
EPS (diluted)      23.17c    16.66c    21.32c ?     18.01c ?
                                                 (0.64?)
Annualised number ?

Sep '06 Dec '05
NAV/share $3.13 $3.15

5. Review Of The Performance Of The Group

Loan assets including hire purchase receivables (net of unamortised charges, interest and transaction costs) stood at $6,029 million at the end of the financial period under review.

This was a net decrease of 0.4% or $25 million over the previous year’s base of $6,054
million as at 31 December 2005, and a net increase of 4.9% or $281 million over the figure
of $5,748 million as at 30 September 2005.

Group profit after tax for the quarter under review registered an increase of $7.2 million or 39.4% over the previous corresponding quarter, whilst for the nine months ended 30
September 2006 showed an increase of $11.1 million or 18.8% over the previous
corresponding period.

With improving credit conditions, the results for the quarter and the
nine months ended 30 September 2006 were arrived at after writing back net allowance for loans and advances amounting to $3.5 million (30 September 2005 : additional net
allowance of $4.7 million) and $5.7 million (30 September 2005 : additional net allowance
of $12.8 million) respectively. The Group continues to maintain adequate individual and
collective allowances in respect of its loan portfolio.

In the opinion of the Directors, no trend, item or event of a material and unusual nature
which would have affected materially the results of the operations of the Group has
occurred in the interval between the end of the financial period and the date of this report.

6. Commentary On Significant Trends and Competitive Conditions In The Industry

Singapore’s GDP growth remains robust with improvement in most economic sectors.
Together with the approvals granted for new largescale projects, this suggests an outlook
for continued expansion.

Hong Leong Finance continues to grow its gross loan base in spite of the very competitive
business environment. Our concentration and focus remains the SME market and the
heartlanders. In addition to our lending in these markets, we are tapping on this base to
expand the distribution of wealth management products. We have recently received approval to expand our product range to include the distribution of structured products and are now able to offer a whole suite of wealth management products to meet our customers’ needs within the limits of their risk appetite. The new offering of cheque accounts to corporate customers who have credit facilities with us will also enable Hong Leong Finance to serve our business customers better.

-- Edited by ahkian at 10:16, 2006-11-11

ahkian · Member

From some analysts:

1) QFBs are potential acquirers of HLF

2) Dividend yield of ~7% per annum from 2005-2007

3) 1.6x P/NTA works out to be $5.00

Current price is $3.70

As of last half year report, its reported NAV is $3.11.

My conservative estimate, minus its non-income generating assets is about $3.00

So 1.5X book value is $4.5

1.6X book value is $4.8

If no takeover happen, last year 16c div is about 4.3% base on current price of $3.70.

But what happened in the last Quarter?

Profit have dropped and operating cash flow went into the red in the first half!!

Why ??

Loans, receivables increase hitting cashflow significantly($100mil).

Cash in hand also drops by >$100mil.