Hong Leong Finance Limited (S41) AI Stock Analysis

• Market Cap: S$1.17B
• Dividend Yield: 4.9%
• Average Volume (3M): 171.59K
• Price to Earnings (P/E): 14.0
• Beta (1Y): 0.27
• 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: 449,531,800
• 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: 72 Outperform
• Price Target: ―

Hong Leong Finance Limited demonstrates solid financial performance with strong profitability and a robust balance sheet. The valuation is attractive with a low P/E ratio and a high dividend yield. Technical analysis suggests a generally positive trend despite recent short-term weakness. Cash flow challenges are a concern but do not overshadow the company's overall stability and growth potential.

Positive Factors

Balance Sheet Health

A debt-free balance sheet significantly reduces financial risk, enhancing the company's ability to invest in growth opportunities and withstand economic downturns.

Profitability

High profitability margins reflect efficient operations and strong pricing power, which are crucial for sustaining long-term growth and shareholder value.

Revenue Streams

Diversified revenue streams from advisory services and fees provide stability and reduce reliance on interest income, supporting sustainable financial performance.

Negative Factors

Cash Flow Challenges

Negative operating cash flow suggests potential inefficiencies in converting revenue into cash, which could limit the company's ability to fund operations and growth.

Revenue Growth Decline

A decline in revenue growth can signal market challenges or competitive pressures, potentially impacting long-term expansion and profitability.

Earnings Per Share Decline

A decline in EPS growth may reflect operational challenges or increased costs, affecting investor confidence and the company's ability to generate shareholder returns.

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

Hong Leong Finance Limited exhibits strong financial health with robust revenue growth and profitability. The balance sheet is particularly strong with no debt and solid equity, minimizing financial risk. Cash flow management exhibits room for improvement, with negative operating cash flows impacting liquidity. Overall, the company appears stable with a focus on growth and sustainability.

Income Statement

Hong Leong Finance Limited has demonstrated consistent revenue growth, with a notable increase of 7.54% in 2024. The net profit margin improved to 44.62% in 2024, indicating strong profitability. However, EBIT and EBITDA margins are not calculable due to missing data, which might suggest potential efficiency issues in operations.

Balance Sheet

The company maintains a solid balance sheet with zero debt and a strong equity position, reflected in a healthy equity ratio of 14.40% in 2024. The return on equity improved to 4.94%, showcasing effective use of shareholder funds. The absence of debt reduces financial risk significantly.

Cash Flow

Despite a high operating cash flow to net income ratio of -2.95 in 2024, indicating cash flow challenges, the company has managed its free cash flow effectively, though it saw a decline compared to previous years. The cash flow strategy appears to focus on maintaining liquidity, but the negative operating cash flow signals potential operational inefficiencies.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	99.66M	601.52M	579.20M	353.69M	251.43M	151.06M
Gross Profit	99.66M	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	32.22M	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	177.12M	-309.14M	144.59M	176.58M	-65.81M	-332.36M
Operating Cash Flow	178.57M	-307.27M	147.53M	178.01M	-65.41M	-332.01M
Investing Cash Flow	-1.46M	-1.87M	-91.50M	-1.43M	-399.00K	1.40M
Financing Cash Flow	-7.55M	-81.02M	517.70M	-77.36M	-38.78M	-23.81M

Hong Leong Finance Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.60
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SG:S41, the sentiment is Negative. The current price of 2.6 is below the 20-day moving average (MA) of 2.61, below the 50-day MA of 2.61, and above the 200-day MA of 2.53, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 45.73 is Neutral, neither overbought nor oversold. The STOCH value of 44.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	72 Outperform	S$1.17B	13.99	4.02%	4.90%	-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%	―	5.17%	-2.09%
U10	66 Neutral	€2.44B	11.07	10.50%	4.78%	7.87%	-4.03%
HKB	58 Neutral	S$1.44B	22.83	―	―	―	―