Hong Leong Finance (“HLF”) just released a horrendous set of FY2023 results. Personally, I thought that from the result announcement deck, one can already see the lack of efforts by the HLF presentation team. There were no powerpoint deck prepared like other listed companies to “beautify” their materials. The presentation team can’t even be bothered to put up a content page listing down the summary and page number of key financial reports (you can look at Haw Par Corporation- at least they bother to do a simple content page). Why I am saying this is that every job is a self-portrayal of one-self and one should always endorse it with excellence….this seems to give one a sense of the culture inside the HLF organization from the lack of further efforts in their basic presentation materials. Anyway, just my personal belief and impression.
Horrendous Set of FY2023 Results with Dividends Cut.
Now back to the FY2023 results discussion- please see screenshot extract below of the published materials:
Overall, profits for FY2023 attributable to shareholders dropped a whopping <28.7%> from S$ 131Mil in FY2022 to only S$93Mil. This is terrible given that the local banks such as DBS, UOB and OCBC are reporting record profits for FY2023. HLF interest income increased by a mere 68.8% but its interest expense increased exponentially by 286.4%!
Now, some folks will jump in and say that HLF cannot be compared to banks as it is a finance company. My point is simple, I will be better off investing my funds in the local blue chip banks rather than wasting the past year in HLF.
Another point is that the activities of HLF is a subset of what the banks provide- if management were to sell away their HLF business, the local banks will be potential bidders for it.
Parting thoughts
Let’s call a spade a spade. My personal thoughts are that HLF management team has performed badly as alluded to the FY2023 financial performance which is shocking. Their senior management should take a leaf out of Joseph Tsai’s book on what he had done at Alibaba, that is replacing the executive team of its various business units if the old ones are running out of ideas on staying competitive and growing the business. Alternatively, just sell off the business to the local or international banks to realize the net asset value per share of S$4.59 relative to its last market trading price of S$2.48 per share as at 29 Feb 2024.
(P.S: I have decided to sell off all my personal and family portfolios related holdings in HLF. Initially, I thought of going to the AGM to raise the above improvement points but based on my personal sensing of the culture in place, think it will be just a waste of my own time. So I voted with my own feet out of this disappointing investment foray into HLF.)
