Hong Leong Asia - DBS Research 2024-10-11: Capture China’s Upgrade Momentum

• We reinstate coverage of Hong Leong Asia (SGX:H22) with BUY , target price S$ 1.28, equating to potential upside of ~50% from the current Hong Leong Asia's share price.
• - Read this at SGinvestors.io -
• building materials segment supporting the regional construction industry.

Trading at attractive valuations.

• Our Hong Leong Asia's target price of S$1.28 is based on a sum-of-the parts valuation (SOTP) methodology:
  • - Read this at SGinvestors.io -
  • 8x P/E for building materials division, and
  • market value for its ~20% stake in BRC Asia (SGX:BEC).
• At the current Hong Leong Asia's share price of S$ 0.82/share, the stock is trading at a forward P/B of 0.6x, which is attractive given that Hong Leong Asia is on the cusp on an earnings upswing, generating a return on equity towards ~9.0%.

Earnings on an upswing; potential for a dividend surprise.

• Read more at SGinvestors.io.

Derek TAN DBS Group Research | Dale LAI DBS Group Research | https://www.dbs.com/insightsdirect/ 2024-10-11 SGinvestors.io

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