Highlights
KLSE: HLIND (3301)       HONG LEONG INDUSTRIES BHD MAIN : Consumer
Last Price Today's Change   Day's Range   Trading Volume
10.04   -0.14 (1.38%)  10.04 - 10.20  58,800
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Overview

Market Cap: 3,292 Million
NOSH: 328 Million
Avg Volume (4 weeks):53,642
4 Weeks Range:10.04 - 11.00
4 Weeks Price Volatility (%):
0.00%
52 Weeks Range:8.42 - 11.60
52 Weeks Price Volatility (%):
50.94%
Average Price Target: 8.63
Price Target Upside/Downside: -1.41

Financial Highlight

Latest Quarter | Ann. Date 30-Jun-2019 [#4]  |  29-Aug-2019
Next QR | Est. Ann. Date: 30-Sep-2019  |  12-Nov-2019
T4Q P/E | EY: 10.07  |  9.94%
T4Q DY | Payout %: 4.77%  |  47.98%
T4Q NAPS | P/NAPS: 4.9603  |  2.02
T4Q NP Margin | ROE: 14.88%  |  20.11%

Headlines

Date Subject
14-Nov-2019 Daily Technical Highlights – (CIMB, HLIND)
02-Aug-2019 下跌股:丰隆工业RM10.70支撑
30-Apr-2019 Hong Leong Industries Berhad (KLSE) #FundamentalDaily - YAPSS
19-Feb-2019 Mplus Market Pulse - 19 Feb 2019
15-Jan-2019 Mplus Market Pulse - 15 Jan 2019
15-Jan-2019 Kenanga Technical Watch - 15/1/2019
17-Dec-2018 Trading Stocks - Hong Leong Industries

Business Background

Hong Leong Industries Bhd is a Malaysia-based company that primarily operates through two segments. The company’s consumer products segment manufactures, assembles, and markets consumer products, including motorcycles, scooters, and related parts, and produces ceramic tiles. The industrial products segment produces and distributes industrial products comprising fibre cement and concrete roofing products. The company also has associates that are involved in motorcycle manufacturing and distribution, as well as newsprint manufacturing and marketing. Hong Leong Industries generates the majority of its revenue from the Malaysian domestic market.
Analyze this stock with MQ Trader system

  5 people like this.
 
antoniomc27 sosfinance, Fabien, thanks for your comments, I learn a lot from you.

I have some questions:

1) do you know of any KLSE stock screener that allows you to see FCF/share or P/FCF?

2) let's say a very ugly global recession strikes. Unemployment goes up, interest rates go down, a lot of companies close shop. How do you think that would affect HLIND? I do not know if motorbike sales would experience a huge drop, or if it would just be mild because people that before would have considered a Perodua/Proton would settle for a bike instead.
06/10/2019 8:38 PM
antoniomc27 I get the following two Fair Value estimates, using Gordon Growth model:

FV = FCFE /(r-g)
FCFE = 350-440
r = 7.7%
g = 1-3%

Conservative -> FV = 350 / (7.7%-1%) = 5224 mio ->RM 15.93 / share
Normal -> FV = 400 / (7.7-1.5%) --> RM 19.67 / share
Optimistic -> FV = 440 / (7.7-2%) = RM 23.54 / share

Fabien please help, I am surely doing something wrong, or else this model is utter bullshit, haha.
06/10/2019 9:02 PM
antoniomc27 Why in this article (just a year ago) the author says 200million FCF, while Fabien gets more like 350-450?

Why does it assume WACC = 7.7%? does WACC equal divident paypout in a company with no debt? And in such case why taking 7.7%, when the dividend yield has been more like 4-5% in past years?

https://seeking-alpha.com/2018/07/28/hong-leong-industries-bhd-rm13-31-thanks-mat-rempit/
06/10/2019 10:08 PM
RainT Wah

sky high target share price
07/10/2019 7:30 PM
Fabien "The Efficient Capital Allocater" Recent FCF already above 400mil (u can cross check from annual reports)

2013 - 158m
2014 - 148m
2015 - 182m
2016 - 280m
2017 - 344m
2018 - 452m
2019 - 481m

take latest 5 year average = 348m

P/(5 year average FCF) = 9.3 times or cash flow yield of 10.75%
07/10/2019 7:59 PM
Fabien "The Efficient Capital Allocater" FCF/share range based on above assumptions:
15.12 - 15.96

my estimates based on very conservative assumptions of minimal growth and high discount rate of 10%

your conservative estimates kind of converge with mine as well.
Conservative -> FV = 350 / (7.7%-1%) = 5224 mio ->RM 15.93 / share
07/10/2019 8:02 PM
edmonster3 Next year flat earnings???
09/10/2019 4:36 PM
RainT @fabien

yes HLIND cash is very good undeniable

but that can make the share price go up? can make the company sales & profit better and grow exponetially ?
09/10/2019 4:52 PM
antoniomc27 oh yes, Thanks a lot for your answer Fabien. I now understand better the company. The article I shared is a very good and informative article, and the guy had a TP of 13.31 before having 2018 and 2019 FCF datas, which soar beyond 400 mill. Indeed RM 15.xx is a very realistic FV.
09/10/2019 11:25 PM
edmonster3 Read the la
test annual report
10/10/2019 9:30 AM
RainT alreday read the recent annual report

just same as the prior annual report

not much special information

but notice that Vietnam motorbike sales is just contribute small portion to HLIND profit & sales
16/10/2019 9:44 AM
sosfinance Copied from @Fabien of HLI's FCF

2013 - 158m
2014 - 148m
2015 - 182m
2016 - 280m
2017 - 344m
2018 - 452m
2019 - 481m

Total cash flow about RM2.045b. Dividend payout ratio is 50%, hence, balance is about RM1.023b accumulated cash, which is equates the net cash balance @ 30 June 2019, RM1.1b.

Going forward, with a FCF of about say, average of RM450m (next 3 years), cash flow will continue to grow another RM1.7b. HLI will likely, have a special dividend payout (100%) of RM1.00 to RM1.50 per share on top of the regular dividend of RM0.50. More importantly, HLI can maintain its earning growth.
16/10/2019 11:33 PM
Fabien "The Efficient Capital Allocater" Any earnings growth would translate into FCF growth, considering of their low capex requirement.

Their return on capital has been consistently high, at or above 25%
19/10/2019 7:25 PM
x3mg33 Despite how good the counter is presented by historical and future prospect and earnings.... management needs to be more proactive to drive the share price to potential levels. All I see for the past years and having attended their AGMs.... management is not one bit excited about looking after shareholders interest and value. They are just not interested in share price enhancement. One can just open their historical share prices and judge for themselves on this. Cash vault is building up by the day but the counter remains undervalued. So say what you want about the counter and praise how impressive and robust the numbers are but until management can translate this into its true value.... one can just sit and stare at a prize. I have been holding this share for many years now and still believe in its potential.... just not how management and the BOD want you to share their wealth.
20/10/2019 10:26 AM
PaulNewman MPI might be a better play. You have the same investment thesis; great cash flow, pile of cash on the books and the same parent company. What’s better is MPI is in an industry that could see potential growth going forward
20/10/2019 10:43 AM
x3mg33 I posted 2 opinions earlier this morning and it seems that one of it has been deleted, but sure if it’s done deliberately. Anyway, I was merely saying that management of HLIND should be more proactive in putting the cash to better use as oppose to leaving it to build up. Suggest that management do something similar like Nestle recently announcing to reduce its cash vault through either share buy back or special dividend. Cash left unused is poor cash management. That’s a fact.
20/10/2019 12:40 PM
sosfinance Dividend has been growing from 25 sen to 50 sen over the past 5 years. Assuming profit doubled in next 5 years, using the same existing PE of 10x, you will get about say RM20 per share + average dividend (growing from 50 sen to 100 sen), total average return together with dividend is about 21% p.a. CAGR.

On a conservative note, you may get 16-20% p.a. CAGR. If market sentiment is good, maybe this counter may enjoy PE of 15x instead of 10x. Actually the choices available is simple, BUY or DON'T.
20/10/2019 2:50 PM
antoniomc27 x3mg33 Amen
20/10/2019 3:42 PM
NOBY I like the numbers but I m not too excited about the Vietnam associate's prospects which has been on the decline since 2017. Q42019 especially showed a big drop in associate earnings with no explanation (maybe Honda is eating more of their market share?). The Vietnamese gov is putting measures to reduce the number of motorcycles on the roads. Q1 and Q2 2019 numbers already showed a slowdown in the motorcycle market there with a decline in sales after 4 consecutive years of growth.

https://vietnaminsider.vn/vietnams-motorcycle-sales-decreased-in-q2-2019/

Motorcycle sales in Malaysia should see steady growth but nowhere near double digits. FY19 was probably spectacular due to a short period in Q1 and Q2 after GE that saw GST zeroised for 3 months spurring a spike in buying. I think it may normalize moving forward.

Just my 2 cents but I m putting it on my watchlist for now.
21/10/2019 10:08 AM
RainT ban motorbike in Hanoi by 2030??

its impossible

then how the people move around ? by cycling , haha
21/10/2019 9:35 PM
SilverHawk Move up silently despite weak KLSE and weak Vietnam sales, maybe hint that :
1. Current price still deep undervalued.
2. Malaysia sales is still solid with room to grow.
3. Dividend payout to be increased.
4. Vietnam recovery is to be seen in 6 months time (hopefully) with new Vietnam CEO just in place.
23/10/2019 5:41 PM
23/10/2019 9:52 PM
SilverHawk Perfect eleven again 。。。
24/10/2019 10:39 AM
sosfinance @Fabien, if I may ask, where did you extract the FCF of HLI, it grow from RM158m to RM481m, about 3 times in six years, this is really high growth (2013-19) similarly the dividend paid doubled from RM80m to RM157m (CAGR 12%) in the same period, that is not bad at all. Volume still pathetic at 55,000 today. (equivalent to Malaysia stock market volume, pathetic)
24/10/2019 7:07 PM
Fabien "The Efficient Capital Allocater" Extracted from Annual Report. Lol
24/10/2019 10:21 PM
sosfinance @Fabien, just wondering why the FCF vs PATMI have a huge difference of RM500 mil for 2013-2019.
25/10/2019 7:59 AM
perangbrown Hong Leong Industries Bhd’s net profit for the 2019 financial year ended June 30, 2019 fell to RM327.08 million from RM334.6 million in the same period last year.

Revenue, however, rose to RM2.75 billion from RM2.5 billion previously.
31/10/2019 11:33 AM
RainT failed to break 12.00
02/11/2019 12:31 PM
sosfinance @perangbrown, FYE2018 included a RM60m write back, the normalised PATMI is RM275m for FYE2018. As for FYE2019, the PATMI is RM327m, an increase of RM52m or 19% depite share of profit in Vietnam dropped significantly.
05/11/2019 1:36 PM
lching icon did you attend HLI AGM this morning?
06/11/2019 12:12 PM
Fabien "The Efficient Capital Allocater" even at very conservative growth assumptions of 1-3%, HLI is worth at least RM15
06/11/2019 4:47 PM
Rwkl During the AGM, a prominent shareholder from i3 mentioned the possibility of $2 eps in a couple of years.
Saliva dropped. Hope he is right......
06/11/2019 6:46 PM
Fabien "The Efficient Capital Allocater" 1Q results should be out within this week
11/11/2019 4:35 PM
x3mg33 Would be interesting to see the results
11/11/2019 7:04 PM
SilverHawk About 85M net profit
11/11/2019 9:13 PM
shpg22 This coming interim dividend should be raised from 15 to 17 cents.
13/11/2019 11:27 AM
x3mg33 17c sounds about right in expectation. Anything above this is a bonus
13/11/2019 11:46 AM
remus big drop! bad QR .... ?!
13/11/2019 1:08 PM
x3mg33 relax brothers.....if you hold this counter long enough, you will understand the price is well controlled. Cash rich company what is there to worry?
13/11/2019 4:33 PM
x3mg33 prices usually suppressed on earnings reporting month.....management controls it internally....has always been the case. One just have to look at the historical prices during earnings reporting month to understand this better.
13/11/2019 4:36 PM
Fabien "The Efficient Capital Allocater" i am hoping for a 20sen dividend
13/11/2019 5:33 PM
remus hi x3mg33, can explain more, why HLI mngt want to suppress the price?
14/11/2019 2:38 PM
kingJ Want to make it private?
14/11/2019 3:22 PM
remus earlier this year was down to 8.50; if want to privatize, should have done it long time ago ....
14/11/2019 3:54 PM
RainT both Hong Leong related companies on down trend

HLIND

MPI
14/11/2019 4:55 PM
RainT Has been holding HLIND for the past 1 year

since from exclusion frm the Shariah list and average up all the way

now turn out to be break even only due to this few days down trend

dividend yield for my investment around 3%

now i know what i cannot make money in share market
14/11/2019 4:59 PM
x3mg33 @remus... it’s hard to understand this counter as it’s full of pleasant surprises, albeit textbook theories shed little light to it. I have been an active investor in this counter since 2015 and still hold until this very day.
At the beginning we thought the price suppression was because of privatisation until this was ruled out by management in the current AGM that has just passed. Personally I think privatisation is still on the cards as the the counter has traded wat below its industry PE. I will not go into details of it’s PE as this has been discussed at length by other contributors.
This counter is mainly held privately by the HL group of companies under the shrewdest and sharp investment wisdom of QLC. Now most of QLC lists of companies are very well managed, take the likes of HLB. It is difficult to gauge what QLC thinks or his next move will be but it will be to his steward advantage. This counter has grown by heaps and bound and there are not many companies in bursa that stands out as much as this counter in terms of its fundamentals. It still bags the question why it is traded so low. I can only think of privatisation in the future and preservation of wealth within the HL group of companies.
In other words, management has very little emphasis on shareholders wealth enhancement. This counter has been trading under the radar for as Long as I can remember and perhaps it is management decision to do so. There’s absolutely no coverage by funds and average volume is illiquid. Every counter on bursa trades on strong growth but not this. It seems to be happy at where it is, status quo.
I just can’t get my head around it.
14/11/2019 5:04 PM
x3mg33 @remus... price suppression because management does not want price to fluctuate on reported results and interim dividend. Think about it, if you are an owner of a listed company would you not want your counter to thrive on good set of numbers and dividends? Unless you want to control the price within an expected level for whatever reason, best to suppress it before reporting results so that it will be within a level that is expected. This is my theory and observation.
14/11/2019 5:11 PM
shpg22 If you have bought HLIND since early 2015, the average adjusted price is around 3.50. Now is 10.20, a return of 190% in 5 years or CAGR of 23.7% per annum. Much better than even S&P500. I don't know why shareholders keep complaining about the price movement, this stock is for long term investor, not punter. Punter can go buy ARMADA, WIDAD etc. But for those opt for punter stock, the chances of you making 190% in 5 years is really dim.
15/11/2019 2:12 PM
remus @x3mg33, thanks reply. agreed with your views. HLI is largely hold by QLC & institution investors ( >80%). don't think got people want, or capable of manipulate this stock except QLC himself.
18/11/2019 9:19 AM


 

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