HL Asia - Hong Leong Asia started at Hold by Phillip

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

Phillip Securities starts Hong Leong Asia (H22.SG) at Hold with $3.62 SOTP-based target price, translating to 10.0x FY11E P/E, 20% discount to 5-year historical 12.5x P/E. Says outlook for 4Q10 “looks rather challenging,” advises investors stay on sidelines. Outlook bleak due to additional marketing expenses in bid to boost sales at Xinfei, sales of refrigerators will be impacted by winter months, stiff competition, increased raw material costs, higher wages in China, also demand for building materials will be highly dependent on weather conditions. “However, on a brighter note we are still very bullish on the prospects of China Yuchai which will benefit strongly from the strong recovery of industrial production and record automobile sales in China.” Adds various JVs will also start commercial production in FY11 which will contribute positively to HLA’s earnings. Shares –0.9% at $3.29.