You are on page 1of 12

Hong Leong Finance Investment Thesis

Prepared by Jun Hao Tay Tay Funds Director

Tay Funds

This presentation should not be taken as a recommendation to anyone to buy, hold or sell Hong Leong Finance securities.
Our opinion of the prospects of Hong Leong Finance should not be considered a guarantee of future events.

Tay Funds

• Largest Finance Company in Singapore • 28 Branches • Recipient of "Singapore Finance Company of the Year“ • Recently celebrated 50th Anniversary this year

Tay Funds

Financial Data Summary

Leverage Ratio






Hong Leong Finance is conservatively financed. Lowest leverage ratio in 5 years.

Tay Funds

Financial Data Summary

Latest Figures from 3rd Quarter 2011, Net Loans - $7,086 million Deposits - $7,322 million Business trends are improving, deposit base and loan volumes at trending upwards.
Tay Funds

Financial Data Summary

Relatively stable earnings even in 2008. Earning in excess of what it’s paying out in dividends. Book value showing upward trend.
Tay Funds

Why Invest in HLF?
• • • • • Low debt levels Sticking to core competence Long term track record Strong management Trading at a large discount to book value

Tay Funds

Price vs Book Value over past 10 Yrs
Optimism Pessimism

Pendulum has swung from extreme optimism to extreme pessimism with prices approaching their 2008 low.
Tay Funds

Historical P/B Ratio




P/B Ratio Historical P/B Ratio





Tay Funds

Huge Discount to Book Value
20/12/2011 Closing Price: $2.10 Book Value Per Share (Sep 2011): $3.57 Selling @ 58% Discount to Intrinsic Value Large margin of safety for business with long term track record
Tay Funds

For the Long Term Investor…
• Wonderful business selling at a large discount to intrinsic value • Not unreasonable to expect HLF to trade at book value of at least $3.50 • Current price provides hefty dividend yield ~ 5% • If the economy turns downwards, HLF will still be able to provide a dividend in the region of ~3% (based on past figures)
Tay Funds

Contact me at for any questions.

Tay Funds