Date: September 17, 2024
Broker: Maybank Investment Bank Berhad

Stock Overview

• Current Share Price: MYR 19.30
• Market Capitalization: MYR 22,147 million
• Target Price: MYR 22.70
• Potential Upside: 18%

Valuation Metrics

• Price-to-Earnings Ratio (PER):
  • CY24E: 6.7x
  • CY25E: 6.4x
• Price-to-Book (P/B):
  • CY24E: 0.7x
  • CY25E: 0.7x
• Return on Average Equity (ROAE):
  • CY24E: 11.1%
  • CY25E: 11.0%
• Net Yield:
  • CY24E: 2.9%
  • CY25E: 2.9%

Earnings and Profitability

HLFG (Hong Leong Financial Group) shows strong earnings potential with a low price-to-earnings (PER) multiple of 6.7x for CY24E, making it attractively valued in the sector. The group is forecasted to maintain stable profitability, with ROAE expected at 11.1% in CY24E and 11.0% in CY25E. This indicates efficient use of equity to generate solid returns for shareholders.

Liquidity and Funding

While specific liquidity metrics for HLFG are not detailed in the report, the overall liquidity environment in the Malaysian banking sector has been improving. This trend is expected to support HLFG’s stable funding costs and contribute to its profitability in the upcoming years.

Growth Prospects

HLFG is well-positioned for long-term growth, with the potential for an 18% upside based on Maybank IBG’s target price. Its low valuation, combined with consistent returns, makes it an attractive investment opportunity within the financial services sector.

Risks and Challenges

Similar to other financial institutions in Malaysia, HLFG faces competitive pressures in both the deposit and lending markets. However, the group’s low valuation and stable profitability mitigate these risks, making it a solid contender for long-term growth.

This information has been extracted from the Maybank Investment Bank Berhad report dated September 17, 2024.