KUALA LUMPUR, Feb 24 — Hong Leong Bank Bhd’s share price on Bursa Malaysia rose in early trade despite the company’s weak results announced yesterday for the second quarter of financial year 2016 (2Q16) ended Dec 31, 2015.
However, research houses are positive on the performance as the results have been factored into their recommendations.
AllianceDBS Research has placed a ‘buy’ call on HLB with a target price (TP) of RM14.70, while Affin Hwang Capital maintained its ‘hold’ recommendation with a TP of RM12.
Both research firms said HLB’s 2Q16 was broadly in line with expectations.
HLB saw its first half net profit coming in lower by 23 per cent year-on-year (y-o-y) to RM978 million after the recognition of a one-off staff mutual separation scheme (MSS) expense of RM172 million, with cost benefits of RM109 million expected over the next one-and-a-half years.
Otherwise, normalised net profit came in 11 per cent lower y-o-y due to lower credit recoveries coupled with a sharper decline of 22 per cent y-o-y in Bank of Chengdu’s (BOCD) contribution.
“We are neutral on the group’s outlook, as 2H16 is expected to be slower due to less upbeat domestic sentiment on loan growth and a weaker overseas contribution from BOCD,” said Affin Hwang in a note.
As at 9.49am, the share price rose 10 sen to RM13.18 with 500 shares changing hands. — Bernama
