COMMENTS ON HONG LEONG BANK BERHAD (5819)

FIGURE 1: HONG LEONG BANK BERHAD LAST 5 YEARS SHARE PRICE TREND

**analysis based on 2019 annual report.

1.       GENERAL INTRO: This counter core business is on various banking services. Hong Leong Bank is one of the major banks in Malaysia. Hong Leong Bank's last five years earning per share fluctuated from 100 to 130sen. At current share price, P/E ratio is at relatively low level (13.85). Total annual dividend payout was 50sen per share, at current share price dividend yield is around 2.94% only. Overall, shares investment in Hong Leong Bank are less attractive compared to Maybank, CIMB Bank and Public Bank.

2.       NOTABLE POINTS:

a.       currently Malaysia's fifth largest banking group, have high asset quality, loan impairment coverage at 136%, the highest in Malaysia banking system

3.       IS THIS COUNTER A STRONG GROWTH STOCK? 

a.       REVENUE RANGE (million): ~4725 million in 2019 annual report, this is a high revenue company.

b.      SHARE PRICE: from 2013-2016, share price steady around RM13, from 2017, share price shot up to around RM21, in 2019 dropped down to RM17

c.       EARNING PER SHARE (EPS): earning per share in last 5 years were fluctuating between 100 to 130 sen per share.

d.      FUTURE POTENTIAL/PROSPECTS: very dependable and reliable counter, share price expected to be stable.

e.      CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 123 million, around 0.06% of total assets.

4.       IS THIS A STRONG DIVIDEND STOCK?     

a.       DIVIDEND YIELD: in 2019 report, Hong Leong Bank declared a total dividend payout of 50 sen per share, amounts to dividend yield of 2.94 % based on current share price.

b.      CONSISTENCY: consistent dividend payout, last five years (2015-2019) dividends declared range from 41 to 50 sen per share.

5.       OTHER INDICATORS:

a.       CASH FLOW: cash flow is positive, around RM 4523 million, equivalent to RM 2.17 per share

b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is well supported by institutional investors, there are 26 institutional investors at top 30 major shareholders list, including EPF (12.24%), Amanah Saham Malaysia (0.62%), Kumpulan Wang Persaraan (1.22%), SOCSO (0.26%) and few insurance companies and investment funds.

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