Hong Leong Asia - CGS-CIMB Research 2023-01-26: Brighter Outlook For FY23

Hong Leong Asia - Brighter Outlook For FY23

  • Reiterate ADD with target price raised to S$1.10 as we see stronger PATMI growth for Hong Leong Asia in FY23F as both its key segments enjoy better prospects.

Diesel engines (Yuchai): Tailwinds in place for cyclical rebound

  • - Read this at SGinvestors.io -
  • In light of the recent COVID policy pivot in China, we lift our expectations on China Yuchai’s engine unit sales to +12.5% y-o-y, catalysed by
    1. supportive economic measures to boost infra investments in China,
    2. replenishment of distributors’ low inventory levels, and
    3. the rollout of more supportive policies on the provincial levels to accelerate elimination of National IV diesel trucks.
  • - Read this at SGinvestors.io -

Building materials: Continued optimism for FY23F

  • We expect Hong Leong Asia (SGX:H22)’s building materials segment PBT to double y-o-y to S$37m in 2H22F, driven by stronger construction activities in Singapore (helped by migrant worker inflow), and grow a further 8% in FY23F as labour productivity improves further.
  • The Building and Construction Authority (BCA) expects total nominal construction output in Singapore to rise to S$30bn-33bn in 2023F (2022p: S$30.2bn), with demand for ready-mixed concrete growing to 11.5m-12.5m m3 in 2023F (2022p: 11.6m m3), while demand for precast concrete reaches 1.6m-1.7m m3 (2022p: 1.4m m3). See also report: Building Materials - CGS-CIMB Research 2023-01-12: On The Path To Recovery.
  • Hong Leong Asia’s precast manufacturing facility in Pulau Punggol Barat which is slated to commence operations in 2023F should also position it well to tap the rising demand of precast concrete in Singapore (2024-25F: 2.0m- 2.6m m3), in line with the government’s push to improve construction productivity.

Reiterate ADD on Hong Leong Asia

  • Read more at SGinvestors.io.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

ONG Khang Chuen CFA CGS-CIMB Research | Kenneth TAN CGS-CIMB Research | https://www.cgs-cimb.com 2023-01-26

Read also CGS-CIMB's most recent report:
2023-09-11 Hong Leong Asia - Well Set For The Future.

Previous report by CGS-CIMB:
2023-08-31 Hong Leong Asia - Better Days Ahead.

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


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