Stock Name: HL Asia
Company Name: HONG LEONG ASIA LTD.
Research House: CIMB
CIMB in a May 13 research report says: "1Q11 core net profit of $18.5 million (-49% y-o-y) was below our expectation and the Street's, forming 17% and 16% of the respective forecasts, due to disappointing performances at both Yuchai and Xinfei. Yuchai's net profit fell 16% y-o-y on weaker unit sales.
"Xinfei slipped into a second quarter of loss on declining margins and $5 million charge accrued in advance for higher selling costs. We cut our FY2011-2013 core EPS estimates by 4-11%, incorporating weaker earnings assumptions for Yuchai and Xinfei, offset by stronger earnings assumptions for Building Materials.
"Accordingly, our sum-of-the-part target price drops from $3.01 to $2.74. While sales at Xinfei should pick up with the arrival of warmer weather, we do not expect a sharp reversal with continued industry competition and rising raw-material and wage costs. MAINTAIN UNDERPERFORM."
Company Name: HONG LEONG ASIA LTD.
Research House: CIMB
CIMB in a May 13 research report says: "1Q11 core net profit of $18.5 million (-49% y-o-y) was below our expectation and the Street's, forming 17% and 16% of the respective forecasts, due to disappointing performances at both Yuchai and Xinfei. Yuchai's net profit fell 16% y-o-y on weaker unit sales.
"Xinfei slipped into a second quarter of loss on declining margins and $5 million charge accrued in advance for higher selling costs. We cut our FY2011-2013 core EPS estimates by 4-11%, incorporating weaker earnings assumptions for Yuchai and Xinfei, offset by stronger earnings assumptions for Building Materials.
"Accordingly, our sum-of-the-part target price drops from $3.01 to $2.74. While sales at Xinfei should pick up with the arrival of warmer weather, we do not expect a sharp reversal with continued industry competition and rising raw-material and wage costs. MAINTAIN UNDERPERFORM."
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