Hong Leong Asia (H22) AI Stock Analysis

• Market Cap: S$2.57B
• Dividend Yield: 2.13%
• Average Volume (3M): 1.54M
• Price to Earnings (P/E): 27.2
• Beta (1Y): 1.07
• Revenue Growth: 13.38%
• EPS Growth: 12.70%
• Country: SG
• Employees: 10,306
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Manufacturers
• EPS (TTM): 0.07
• Shares Outstanding: 748,141,300
• 10 Day Avg. Volume: 1,517,790
• 30 Day Avg. Volume: 1,543,006
• PEG Ratio: -0.38
• Price to Book (P/B): 0.67
• Price to Sales (P/S): 0.17
• P/FCF Ratio: 3.98
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: S$4.20
• Price Target Upside: 22.45% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: S$4.00 ▲(16.62% Upside)

The score is primarily supported by solid financial performance (revenue growth and strong free cash flow generation with manageable leverage). Technicals remain constructive but are tempered by overbought signals (high RSI/Stoch), while valuation is a secondary drag due to a higher P/E and modest dividend yield.

Positive Factors

Revenue Growth

Sustained TTM revenue growth indicates steady demand for the group's building materials. Over 2–6 months this underpins scale advantages, supports fixed-cost absorption, and provides a platform for reinvestment and market share retention amid cyclical construction activity.

Free Cash Flow Generation

Very strong FCF growth and a high free cash flow to net income ratio enhance financial flexibility. Durable cash generation supports capex, debt reduction, and reinvestment into operations, improving resilience to cyclical downturns and strategic execution over months.

Manageable Leverage and ROE

A moderate debt-to-equity level with a positive ROE suggests the company funds growth without excessive leverage. This capital structure supports operational continuity, funding flexibility, and lower refinancing risk over the medium term while preserving the ability to invest in growth.

Negative Factors

Declining EBIT/EBITDA Margins

Worsening EBIT/EBITDA margins signal erosion in core profitability, which can persist if cost pressures or pricing weakness remain. Over several months, sustained margin decline undermines ability to convert revenue into durable profits and constrains cash available for reinvestment.

Thin Net Profit Margin

A net margin under 2% leaves limited buffer against input cost increases or sales volatility. This structural thinness raises earnings volatility risk and limits retained earnings for capex or debt reduction, making long-term earnings stability more sensitive to cyclical swings.

Low Operating Cash Flow Conversion

Operating cash flow converts only a small fraction of reported net income, suggesting working capital or non-cash items reduce cash quality. Persistently weak conversion undermines sustainable cash available for debt service, dividends, or investment over the medium term.

Hong Leong Asia Business Overview & Revenue Model

Company Description

Hong Leong Asia Ltd., an investment holding company, manufactures and distributes diesel engines and related products, building materials, and rigid packaging products in the People's Republic of China, Singapore, Malaysia, and internationally. Its Diesel Engines segment offers diesel engines and automobile spare parts. The company's Building Materials segment manufactures and supplies cement, pre-cast concrete elements, ready-mix concrete, and quarry products for public housing construction. The Rigid Packaging segment provides plastic packaging related products and container components. It is also involved in hospitality and property development activities. The company was founded in 1941 and is headquartered in Singapore. Hong Leong Asia Ltd. is a subsidiary of Hong Leong Corporation Holdings Pte Ltd.

How the Company Makes Money

Hong Leong Asia generates revenue through multiple streams, primarily from its manufacturing operations and distribution of building materials and automotive products. The company earns money by selling its products directly to construction companies, contractors, and automotive manufacturers. Additionally, it benefits from long-term contracts and partnerships with key players in the construction and automotive industries, which provide stable revenue inflows. The company's focus on expanding its production capacity and improving operational efficiency also contributes to its profitability.

Hong Leong Asia Financial Statement Overview

Summary

Solid fundamentals supported by 6.37% TTM revenue growth and strong free cash flow growth (44.94%). Leverage looks manageable (debt-to-equity 0.83) and ROE is healthy (9.31%), but declining EBIT/EBITDA margins point to operational efficiency pressure.

Income Statement

Hong Leong Asia's income statement shows a positive trajectory with a 6.37% revenue growth in the TTM period. Gross profit margin is stable at 15.44%, though slightly lower than previous periods. Net profit margin improved to 1.95%, indicating better cost management. However, EBIT and EBITDA margins have decreased, suggesting potential operational inefficiencies.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 0.83, showing a manageable level of leverage. Return on equity is at 9.31%, indicating effective use of equity to generate profits. The equity ratio stands at 15.54%, suggesting a solid equity base relative to total assets.

Cash Flow

Cash flow analysis reveals a strong free cash flow growth of 44.94% in the TTM period, highlighting improved cash generation. The operating cash flow to net income ratio is 0.18, and free cash flow to net income ratio is 0.85, indicating robust cash flow relative to earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.83B	4.08B	4.25B	3.88B	4.93B	4.50B
Gross Profit	745.33M	684.48M	730.80M	681.59M	729.44M	719.45M
EBITDA	227.68M	365.09M	379.95M	304.51M	324.44M	366.32M
Net Income	94.24M	64.88M	87.78M	54.54M	60.12M	46.74M
Balance Sheet
Total Assets	6.49B	5.81B	5.50B	5.32B	5.99B	5.86B
Cash, Cash Equivalents and Short-Term Investments	1.54B	1.35B	1.23B	1.01B	1.22B	1.35B
Total Debt	835.17M	920.75M	930.50M	915.20M	943.29M	838.39M
Total Liabilities	4.06B	3.36B	3.13B	2.96B	3.46B	3.44B
Stockholders Equity	1.01B	1.01B	922.01M	902.55M	956.90M	879.97M
Cash Flow
Free Cash Flow	542.71M	170.97M	262.85M	-112.33M	-70.01M	63.66M
Operating Cash Flow	641.61M	289.64M	362.04M	37.65M	130.67M	306.07M
Investing Cash Flow	-51.03M	-29.36M	-72.41M	-69.36M	-238.57M	-168.71M
Financing Cash Flow	-300.28M	-155.30M	-49.38M	-63.56M	-85.30M	-126.47M

Hong Leong Asia Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3.43
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SG:H22, the sentiment is Positive. The current price of 3.43 is above the 20-day moving average (MA) of 2.85, above the 50-day MA of 2.48, and above the 200-day MA of 2.02, indicating a bullish trend. The MACD of 0.23 indicates Negative momentum. The RSI at 81.22 is Negative, neither overbought nor oversold. The STOCH value of 91.03 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SG:H22.

Hong Leong Asia Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QES	80 Outperform	S$708.46M	7.94	11.64%	4.40%	-3.11%	28.89%
N0Z	71 Outperform	S$38.79M	5.64	5.45%	3.97%	30.99%	-7.99%
H22	69 Neutral	S$2.57B	27.22	9.55%	2.13%	13.38%	12.70%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

Hong Leong Asia Corporate Events

Hong Leong Asia Moves to Spin Off Marine and Genset Unit via Hong Kong Listing

Hong Leong Asia has announced that Guangxi Yuchai Marine and Genset Power Co., Ltd. (MGP), an indirect and principal subsidiary held through China Yuchai International, has submitted an application for a listing of its shares on the Mainboard of the Hong Kong Stock Exchange as part of a proposed spin-off. The company has received an indication from the Singapore Exchange that it has no comments on the proposed spin-off, and does not expect to require shareholder approval for the transaction, although the deal remains subject to regulatory clearances and market conditions, with no assurance it will proceed, and further updates to be provided as material developments arise.

The most recent analyst rating on (SG:H22) stock is a Hold with a S$3.00 price target. To see the full list of analyst forecasts on Hong Leong Asia stock, see the SG:H22 Stock Forecast page.

China Yuchai Secures Control Stake in Fuel-Injection Specialist NYDK to Bolster Powertrain Supply Chain

China Yuchai International’s subsidiary Guangxi Yuchai Machinery has acquired a 27.97% equity stake, or 83,918,495 shares, in Nanyue Diankong (Hengyang) Industrial Technology for about RMB 176.2 million in cash, making Yuchai the second-largest shareholder in the fuel-injection specialist. By entering a concerted action agreement with NYDK’s largest shareholder, Hunan Hengyang Auto Parts Factory, Yuchai gains effective operational control, including the right to nominate six of nine directors and appoint the general manager, a move that strengthens its supply chain in critical fuel injection components and is likely to deepen vertical integration and enhance competitiveness in its core powertrain business.

The most recent analyst rating on (SG:H22) stock is a Hold with a S$2.00 price target. To see the full list of analyst forecasts on Hong Leong Asia stock, see the SG:H22 Stock Forecast page.

China Yuchai Increases Stake in HL Global Enterprises

China Yuchai International Limited has increased its stake in HL Global Enterprises Limited from 48.90% to 49.11% by acquiring 200,000 shares at S$0.331 per share. This move enhances China Yuchai’s influence in HLGE, which operates the Copthorne Hotel Cameron Highlands in Malaysia and is listed on the Singapore Exchange. The acquisition reflects China Yuchai’s strategic efforts to strengthen its market position and diversify its interests, potentially impacting its operational dynamics and stakeholder relations.

The most recent analyst rating on (SG:H22) stock is a Hold with a S$2.50 price target. To see the full list of analyst forecasts on Hong Leong Asia stock, see the SG:H22 Stock Forecast page.