Hong Leong Industries (HLIND) didn’t declare a dividend throughout the quarter, because it usually broadcasts an annual dividend throughout 1H.
“HLIND’s FY23 income rose 39% on the financial system reopening with secure manufacturing at each Yamaha Motor and Guocera manufacturing crops,” mentioned Kenanga Analysis (Kenanga) within the latest Outcomes Notice.
Nevertheless, its earnings earlier than curiosity and tax solely grew 23% because it booked in high-cost inventories procured throughout the interval of provide chain disruptions.
“Within the absence of prosperity tax, its core web revenue rose by a bigger magnitude of 53%. When it comes to motorbike business whole business quantity, the quantity rose to 650,000 models (+3%) Malaysia and a pair of.58m models (+2%) in Vietnam,” mentioned the analysis home.
HLIND’s 4QFY23 income fell 17% primarily resulting from decreased manufacturing capability of the Yamaha in style fashions in anticipation of the
launching of new-generation Y15ZR SE, XMax 250 and Ego Gear.
Nonetheless, its earnings earlier than curiosity and tax solely eased 1% with the gradual run-down of high-cost inventories. Its core web revenue
rose 5% due to a decrease efficient tax price.
“We additionally preserve our Goal Value at RM11.40 and preserve the Outperform score,” mentioned Kenanga.
The analysis home likes HLIND as it’s a sturdy proxy to the booming gig financial system given the vital position of motorised two-wheelers in executing on-line supply transactions, its affiliation with the sturdy Yamaha motorbike model in Malaysia and the model’s market chief place within the native motorbike phase, and for its sturdy warfare chest with a web money of RM1.6b which may very well be deployed for earnings-accretive acquisitions. Its dividend yield is enticing at 7%.
Dangers to Kenanga’s name embrace customers slicing again on discretionary spending (significantly big-ticket gadgets like new bikes) amidst excessive inflation, provide chain disruptions, escalating enter prices, and a worldwide recession hurting demand for the export of its bikes and