HL Asia - Hong Leong Asia downgraded to Underperform by CIMB

Stock Name: HL Asia
Company Name: HONG LEONG ASIA LTD.
Research House: CIMB

CIMB downgrades Hong Leong Asia (H22.SG) to Underperform from Outperform, cuts target price to $3.21 from $4.86, valuing China unit Xinfei at 10X FY11 P/E vs 16X FY10 P/E previously, to account for slower growth, says Dow Jones.



CIMB also lowers group FY10-12 core EPS estimates by 18%-20% to assume reduced contributions from other Chinese unit Yuchai.

Notes 2Q10 earnings of consumer electronics unit Xinfei down despite June quarter being its seasonally strongest quarter, hurt by weaker margins stemming from higher raw material costs, trade discounts offered to counter competition.



Research house says 2Q10 performance of diesel engines unit Yuchai hurt by higher selling & distribution costs. Shares off 4.0% at $3.56.