MAYBANK IB Research has lowered Hong Leong Financial Group Bhd’s (HLFG) financial year 20/21/22E (estimates) net profit by eight per cent/one per cent/one per cent to factor in lower contributions from Hong Leong (HL) Bank and Hong Leong Assurance (HLA).
However, the research bank in a note said that it has lifted HL Bank’s target price (TP) to RM14.30 from RM13.50 on rolling valuations to the calendar year (CY) 2021.
Correspondingly, it has marginally raised the TP for HLFG by five sen to RM14, while maintaining the ‘hold’ rating.
HLFG’s third quarter (Q3) FY20 net profit of RM535 mil took the nine-month FY20 core net profit to one per cent lower year-on-year (YoY) to RM1.9 bil.
The results were below expectations at 71% of our full-year forecast, mainly because of a larger-than-expected net interest margin (NIM) compression and pre-emptive provisioning during the quarter.
Loan growth was a robust 6.6% YoY while costs were under control.
Meanwhile, AmInvestment Bhd in its research note maintained its ‘buy’ call for the HLFG with a revised fair value to RM16.50 per share from RM16.60 previously, based on a lower derived sum of the parts valuation.
“We fine-tune our net profit estimate for FY20/21 by -3.4/-3.3% by lowering our non-interest income estimates and factoring in a higher credit cost of 0.15% for FY20.
“HLFG remains a cheaper entry for gaining exposure to HL Bank,” it said.
As at 10.13am, HLFG share price was down 20 sen to RM13.20 with 1,400 shares changing hands. – June1, 2020, Bernama
