KUALA LUMPUR (May 17): Shares of Hong Leong Industries Bhd (KL:HLIND), or HLI, climbed to near their record high on Friday, after the motorcycle assembler reported a 51% year-on-year jump in net profit for the three months ended March 31, 2024.
HLI rose 40 sen, or nearly 4% to RM11.24, and close to its all-time high of RM11.26 in April. At 11am, the stock pared gains to settle at RM11.04, still up 20 sen, valuing the company at more than RM3.6 billion on Bursa Malaysia.
Kenanga Investment Bank, the sole research house covering the stock with an ‘outperform’ rating, said the results were ahead of its expectations with the nine-month core net profit, excluding one-offs, reaching 81% of its full-year forecast on the back of strong motorcycle sales following credit easing.
“We continue to like HLI as it is a strong proxy to the booming gig economy given the critical role of motorised two-wheelers in executing online delivery transactions,” Kenanga said. The research house also cited its association with the Yamaha motorcycles in Malaysia and the brand’s market leader position.
Further, HLI’s strong war chest with a net cash of RM1.6 billion could be deployed for earnings-accretive acquisitions, Kenanga added. The research house raised its net profit forecasts by 6% for the financial year ending June 2024 (FY2024) to RM322.2 million, and by 8% for FY2025 to RM345.4 million.
HLI’s net profit for its third financial quarter ended March 31, 2024 (3QFY2024) jumped 51% year-on-year, boosted by a RM25 million insurance compensation it received for the disruption caused by floods in its motorcycle business during the third quarter of FY2022.
Net profit in 3QFY2024 was RM99.43 million, versus RM65.91 million a year earlier, the group’s Bursa Malaysia filing on Thursday (May 16) showed.
However, revenue for the quarter fell 17.9% to RM758.03 million, from RM923.35 million in 3QFY2023, due to lower motorcycle sales.
The group declared a second interim single-tier dividend of 37 sen per share for the quarter under review, with an ex-date of June 4, payable on June 25.
This brings the year-to-date dividend to RM1.07 per share, exceeding the total dividend of 57 sen paid for FY2023, and 52 sen paid for FY2022.