Hong Leong Asia (H22) H1 2024 earnings summary

Executive summary

• 1H 2024 revenue rose 8.5% YoY to S$2,251.2m; profit from continuing operations increased 43.8% to S$92.4m and attributable profit rose 60.9% to S$49.5m.

• Growth was supported by higher engine sales and improved margins, alongside stronger building materials results; 2024 performance was expected to remain on track, barring unforeseen circumstances.

Financial highlights

• Revenue was S$2,251.2m versus S$2,075.1m, up 8.5% YoY; gross profit rose 12.7% to S$420.1m and gross margin improved to 18.7% from 18.0%.

• Net profit was S$92.5m versus S$64.1m, up 44.3%; profit excluding discontinued operations was S$92.4m versus S$64.3m, up 43.8%.

• Attributable net profit rose 60.9% to S$49.5m; EPS was 6.62 cents versus 4.12 cents, while basic EPS from continuing operations was 6.61 cents versus 4.13 cents.

• Selling and distribution costs rose 31.2% to S$171.2m, mainly due to higher Yuchai warranty expenses; R&D costs fell 5.8% to S$73.4m.

• Operating cash flow before working-capital changes was S$241.1m versus S$190.3m; net cash from operating activities was S$45.5m versus S$75.2m, while free cash flow rose to S$140.3m from S$108.0m.

Outlook and guidance

• Barring unforeseen circumstances, businesses were expected to perform well in 2024.

• China’s RMB300bn vehicle and equipment replacement programme was viewed as positive for powertrain demand; Yuchai continued R&D on on-road, off-road and new-energy products.

• BMU Singapore expected Precast and Ready-Mix Concrete order books to grow, supported by public- and private-sector projects; new facilities and larger trucks were intended to support capacity and efficiency.

• Tasek expected demand to improve with infrastructure spending and focused on operating efficiency and greater use of recycled and alternative materials and fuels.

• Tasek was addressing cost pressure following Malaysia’s June 2024 removal of diesel subsidies through efficiency improvements and increased alternative-fuel and raw-material use.