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What's their competitive edge in securing SME clients? I remember for SME it's OCBC or UOB that is the market leader. Same goes for other loans? Also why would people deposit their money with them considering they give similar interest rates? If they are the smaller players in the field, maybe it is too much to expect similar valuations... Since nobody's going to bail them out should anything go wrong :p
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My recommendation is to track deposit and loan levels to see their effectiveness in attracting deposits + making loans as cheap sources of funding are key for profitability for banks.
With regards to valuations, its more than art and science but I prefer to look at the historical valuation of financial institutions vs their relative valuation to get a rough idea of what the company is worth.
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Hey juno, thank you for sharing!
HL Fin doesn't seem to grow much in net profit over past 10 years. Will it remain the conservative strategy for future?
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I used to own HLF for probably close to 10 years until I decided to cut it off last year. Including dividends I probably make only about 1% compounded over the years. dead money.
As far as i am concerned HLF is a Value Trap. All these while HLF was selling cheap wrt to the other 3 banks. I was hoping that KLB would sell it off to realised the valuation gap. There were 2 times when he could have sold it but after several post-AGM conversations with KLB I don't think he will ever sell it although he said at the right price he will.If you ask for some ridiculous high price, it's as good as not offering at all.One time was when MAS was giving away QFB to the foreign banks and HLF would be a good entry for them. this was before the 08 crisis of course. another time would be during the crisis when his property empire needs the cash.The reason why he will never sell it is the same as WCY with his Haw Par(another valuation trap). he needs the "bank" to support his property development. Notice that with CDL launched projects they naturally push HLF for loans.In itself is not bad except that HLF could give favorable rates to property buyers....not so good for HLF profitability.
another reason why I finally throw in the towel is that KLB is the CEO and he award himself with generous stock options. he already owns a sizeable chunk of the company. Does he need more stock options to motivate himself to drive the company higher.In the long run minority shareholders gets diluted and he gets more and more of the company.
yes base on valuation HLF is cheap but if you are buying to hold I would advise against it. However if you are buying to capture the cyclical upturn, you are better off buying any of the 3 banks. when the funds comes back they will go for the index banks and HLF will later be pull up along but at a slower pace.
just my 2 cents worth. not vested in any of the counters mentioned.
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Hl Fin at current prices is a value stock. How value will be unlocked, only time will tell. There was an excellent opportunity years ago when QFB licences were awarded in Singapore. However, foreign banks simply got the licences and walk straight into local banking scene.
Now with this buzz on Sing - M'sia exchange, there are valid speculations. Based on historical reasonings, even if an exchange materialise, the likely beneficiary will be that with strong and well connected Bumi holdings. Quite logically as well since DBS is the only remaining Sing banks (only 3 of them now) without a M'sian presence.
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