Another quarter of good results for HLFG’s 1QFY18

KUCHING: Hong Leong Financial Group Bhd’s ( HLFG) first quarter of financial year 2018 (1QFY18) was another quarter of good results for the group, analysts believe.

As per HLFG’s filing on Bursa Malaysia, the group’s net profit for the current quarter ended September 30, 2017 amounted to RM455.25 million, up from RM386.19 million year on year (y- o-y).

HLFG’s 1QFY18 net profit came in within the research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) expectations, at 27.2 per cent and 26.5 per cent of its and consensus’ full year estimates, respectively.

“We believe it was another quarter of good result for the group,” MIDF Research said.

“Its Commercial Banking segment under Hong Leong Bank Bhd ( HLB) had a very strong earnings growth and a solid near term prospect with its digitalisation initiative.”

However, MIDF Research believed that the positives have been priced in for HLB.

“Contrastingly, it appeared that there is a slight lag in pricing in HLB’s good performance to HLFG’s share price.”

As such, the research arm believed that there is a trading opportunity.

Hence, MIDF Research upgraded its call on HLFG to ‘ trading buy’.

The research arm adjusted its target price to RM17.67 per share, from RM17.64 per share previously, due to the update of several components of its sum-of-the-parts valuation.

Meanwhile, no changes were made to MIDF Research’s FY18 estimate but a slight tweak was made to its FY19 forecast.