Hot Stock HLFG rises 1.6% on growth prospects

by **Cals** Mon 11 Nov 2013, 16:10

Hot Stock HLFG rises 1.6% on growth prospects

Business & Markets 2013

Written by Jeffrey Tan of theedgemalaysia.com

Monday, 11 November 2013 15:33

KUALA LUMPUR (Nov 11): Hong Leong Financial Group Bhd (HLFG) rose as much as 1.6% on the group's growth prospects.

At 12.30pm, HLFG rose 20 sen or 1.3% to RM15.02 on 29,600 shares. It was the fourth-largest gainer. At 3.18pm, the stock was traded at RM15.04.

HLFG had earlier risen as much as 24 sen to RM15.06.

In a note, Maybank Investment Bank analyst Desmond Ch’ng said HLFG will strive to double group profitability over the next five years, while expanding overseas contribution to between 30% and 40% of earnings over the period.

This compares to about 13% at present.

"Management has set itself high targets and will strive to double group profitability over the next five years, while expanding overseas contributions to 30-40% of earnings over that
period, from about 13% presently.

"Any bank M&A will focus on emerging markets in ASEAN; management is also interested in
expanding its life insurance franchise in the region. There is, however, nothing on the horizon just yet, as current valuations are not justifiable

Ch’ng said the group’s current structure could be more capital efficient by creating a bank holding company for the commercial banking entities or listing the insurance group separately.

“We think the latter is most feasible, as there is much latent value which can be unlocked for HLFG.

“Management does however stress that there is no rush to restructure just yet.” he said.

Meanwhile, Kenanga Research said it sees immediate technical support and resistance levels at RM14.82 and RM15.02 respectively for HLFG.