Hong Leong Finance Limited (S41) AI Stock Analysis

• Market Cap: S$1.24B
• Dividend Yield: 4.87%
• Average Volume (3M): 171.59K
• Price to Earnings (P/E): 14.7
• Beta (1Y): 0.28
• Revenue Growth: -10.51%
• EPS Growth: -15.79%
• Country: SG
• Employees: 632
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.07
• Shares Outstanding: 449,866,820
• 10 Day Avg. Volume: 99,460
• 30 Day Avg. Volume: 171,586
• PEG Ratio: 1.12
• Price to Book (P/B): 0.53
• Price to Sales (P/S): 1.84
• P/FCF Ratio: -3.58
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: S$3.00 ▲(14.07% Upside)

The score is driven primarily by strong balance-sheet conservatism and consistently positive earnings with improving net income, tempered by inconsistent cash flow (including a negative reversal in 2024). Valuation is supportive with a solid dividend yield and moderate P/E, while technicals indicate stable, mildly positive momentum rather than a strong uptrend.

Positive Factors

Balance Sheet Strength

A strong balance sheet with low debt-to-equity ratio provides financial flexibility and reduces risk, supporting long-term stability.

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, enhancing long-term prospects.

Net Income Consistency

Sustained positive net income reflects operational efficiency and profitability, supporting financial health and investor confidence.

Negative Factors

Cash Flow Volatility

Volatile cash flow undermines financial stability and limits the ability to fund operations and growth internally, posing a risk.

Margin Volatility

Fluctuating margins indicate potential operational inefficiencies and pricing pressures, affecting profitability and competitiveness.

Earnings Volatility

Earnings volatility can lead to uncertainty in financial planning and investor confidence, impacting long-term growth potential.

Hong Leong Finance Limited Business Overview & Revenue Model

Company Description

Hong Leong Finance Limited provides various financial services to business and retail customers in Singapore. It accepts savings and business current accounts, as well as fixed deposits. The company also offers new and used car, home, and private property loans, as well as mortgage equity and share financing services. In addition, it provides small and medium enterprise (SME) loans, including accounts receivable financing, block discounting, equipment loans, HDB SME loans, hire purchase, medical asset financing, property development loans, SME care programmes, SME property loans, suppliers' invoice financing/letters of credit, syndicated loans, and term loans/working capital loans, as well as enterprise finance schemes, such as SME fixed assets, SME working capital, and trade schemes. Further, the company offers corporate finance services, including issuing management and sponsoring services; corporate advisory services in the areas of financial advisory, independent financial advisory, mergers and acquisitions, and restructuring; and equity fund raising services, such as initial public offering, secondary fund raising, and underwriting of shares. It operates through a network of 28 branches and 12 SME centers. The company was incorporated in 1961 and is based in Singapore.

How the Company Makes Money

Hong Leong Finance Limited generates revenue through its diverse portfolio of financial services. The primary source of income comes from the interest earned on loans extended to individuals and businesses, which include personal loans, car loans, and business loans. Additionally, the company earns fee income from the provision of corporate finance advisory services and transactional fees. Deposit-taking activities also contribute to the company's earnings, as it utilizes customer deposits to fund its lending operations, earning a spread between the interest paid on deposits and the interest received from loans. Partnerships with government bodies for the distribution of government assistance programs further enhance its revenue streams. The company's strategic focus on understanding and meeting the financial needs of its clients, along with prudent financial management and risk assessment, play a crucial role in sustaining its profitability.

Hong Leong Finance Limited Financial Statement Overview

Summary

Overall fundamentals are solid but uneven: income statement strength (revenue step-up into 2022–2024 and rising net income into 2024) and a very conservative balance sheet (very low debt-to-equity and steady equity growth) are offset by weak and volatile cash generation, with operating/free cash flow negative again in 2024.

Income Statement

Revenue has expanded sharply over the period (notably the step-up into 2022–2024), and net income has remained consistently positive, rising from 2023 to 2024. Profitability looks solid on a bottom-line basis in 2024 (net margin ~17%), but reported operating profitability is mixed, with EBIT margins turning negative in 2022–2024 versus strong positives in 2019–2021. Overall, the income profile shows good earnings resilience and growth, tempered by margin volatility and inconsistencies in operating-profit presentation.

Balance Sheet

The balance sheet screens conservatively levered, with very low debt relative to equity (debt-to-equity ~0.9%–2.5% across years) and a steady equity base that has grown gradually. Returns on equity are moderate and fairly stable (~3%–6%), peaking in 2022 and easing somewhat in 2023–2024. Strength is clear financial flexibility and low balance-sheet risk, with the main drawback being only mid-level shareholder returns rather than standout profitability.

Cash Flow

Cash generation is the weakest area: operating and free cash flow are negative in multiple years (2019–2021 and again in 2024), including a sizable outflow in 2024, after two strong positive years in 2022–2023. This creates a choppy cash profile and reduces confidence in the consistency of internally generated funding. The key positive is that 2022–2023 showed the business can produce meaningful positive cash flow, but the 2024 reversal reintroduces volatility risk.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	157.02M	601.52M	579.20M	353.69M	251.43M	151.06M
Gross Profit	157.02M	233.28M	212.31M	258.74M	189.42M	151.06M
EBITDA	43.33M	0.00	119.59M	165.05M	109.95M	82.64M
Net Income	57.96M	104.08M	93.37M	130.88M	84.82M	63.91M
Balance Sheet
Total Assets	14.68B	14.63B	14.96B	14.28B	12.95B	13.37B
Cash, Cash Equivalents and Short-Term Investments	1.28B	1.11B	1.50B	926.04M	828.65M	933.24M
Total Debt	1.07M	45.35M	17.92M	63.89M	37.44M	42.35M
Total Liabilities	12.58B	12.53B	12.90B	12.23B	10.99B	11.45B
Stockholders Equity	2.10B	2.11B	2.06B	2.04B	1.96B	1.92B
Cash Flow
Free Cash Flow	127.60M	-309.14M	144.59M	176.58M	-65.81M	-332.36M
Operating Cash Flow	129.36M	-307.27M	147.53M	178.01M	-65.41M	-332.01M
Investing Cash Flow	-1.76M	-1.87M	-91.50M	-1.43M	-399.00K	1.40M
Financing Cash Flow	51.55M	-81.02M	517.70M	-77.36M	-38.78M	-23.81M

Hong Leong Finance Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2.63
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SG:S41, the sentiment is Positive. The current price of 2.63 is below the 20-day moving average (MA) of 2.67, below the 50-day MA of 2.63, and above the 200-day MA of 2.58, indicating a bullish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 78.71 is Negative, neither overbought nor oversold. The STOCH value of 79.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SG:S41.

Hong Leong Finance Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
S41	71 Outperform	S$1.24B	14.74	4.02%	4.87%	-10.51%	-15.79%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
TCU	66 Neutral	S$292.60M	27.14	20.94%	3.13%	5.17%	-2.09%
U10	66 Neutral	S$3.10B	14.06	10.50%	4.63%	7.87%	-4.03%
HKB	58 Neutral	S$1.44B	22.13	―	―	―	―