- Hong Leong Asia (SGX:H22)'s FY21 revenue grew 9.7% y-o-y to S$4.9bn, exceeding our forecasts by 5%. However, FY21 PATMI formed only 81% of our full-year forecasts, at S$60.1m. Notably, 2H21 revenue and PATMI declined steeply h-o-h, as pre-buying for diesel engines (in preparation for regulatory changes) tapered off
- - Read this at SGinvestors.io -
- We are projecting diesel engine sales of 441,447 for FY22, noting that strong pre-buying may lead to lower sales in the following period (as seen in 2014-2015). Segment EBIT margins are also projected to come in at 3.3%, an improvement, as we expect R&D spend related to National VI engine standards to taper off as the standards come into effect.
- Hong Leong Asia (SGX:H22)'s FY21 revenue grew 9.7% y-o-y to S$4.9bn, exceeding our forecasts by 5%. However, FY21 PATMI formed only 81% of our full-year forecasts, at S$60.1m. Notably, 2H21 revenue and PATMI declined steeply h-o-h, as pre-buying for diesel engines (in preparation for regulatory changes) tapered off
- While diesel engine unit sales were in line at 456,791 (457,849 forecasted), research and development spending came in much higher than expected, denting diesel engine segment EBIT margins to 2.5% (FY20: 4.8%).
- Lower capitalisation of R&D expenses, together with the further development of National VI and Tier 4 engines and new energy products, drove R&D spend to rise an aggressive 72% h-o-h, to S$111.8m. This was a surprise and meant that the diesel engine segment recorded a FY21 margin of ~2.5%, a 2.3ppt decline y-o-y.
- We are projecting diesel engine sales of 441,447 for FY22, noting that strong pre-buying may lead to lower sales in the following period (as seen in 2014-2015). Segment EBIT margins are also projected to come in at 3.3%, an improvement, as we expect R&D spend related to National VI engine standards to taper off as the standards come into effect.
- A bright spot was Hong Leong Asia's building material segment, where EBIT grew 53.3% y-o-y to $24.5m in FY21, exceeding our forecasts by 6%.
- Read more at SGinvestors.io.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
Woon Bing Yong DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-03-04
Price targets by other brokers at Hong Leong Asia Target Prices.
Listing of research reports at Hong Leong Asia Analyst Reports.
Relevant links:
Hong Leong Asia Share Price History,
Hong Leong Asia Announcements,
Hong Leong Asia Dividends & Corporate Actions,
Hong Leong Asia News Articles
