See: Hong Leong Finance reports 84% rise in 3Q earnings to $23.6 mil
In a Monday report, analyst Lim Sue Lin says the finance company’s strong 9M17 earnings has prompted the house to raise FY17 earnings by 5% on higher NIM and loan growth.
With a positive outlook on the macro front and interest rate environment, Lim also expects loan growth and NIM to improve, hence raising FY18-19 earnings by 5-13% p.a.
Sustained improvement in earnings traction should be positive to share price.
Lim also believes that with the MAS’ rule relaxation on fincos in mid-Feb 2017, which lifted the limits on uncollateralised loans as a percentage of capital funds and liberalised its existing policy to allow a foreign takeover of a finco, opens new opportunities for Hong Leong Finance.
DBS is maintaining its “buy” with unchanged $3.20 target price.
The counter is up 2 cents to $2.74 or 13.8 times FY18 forecast earnings.
