Hong Leong Finance

[CY09]

"Holding period is subjective. From a trader's perspective maybe a week is far too long. From a business owner's perspective, holding period is not a concern, as long as the business is feasible and the people managing it are decent. I have learnt that"

One more persepctive you have to think of - the controlling shareholder. His/her holding period can be very long with the ability to install and satsify their underlings/friends by granting them well paying jobs at the expense of other OPMIs.

It is a very unfair playing field in stocks (society) we have in Singapore, but as OPMIs, we have to deal with it

[Big Toe]

I dont view it as unfair. These are the rules, I would applaud any effort to change it but it is what it is. There is no reason to invest if one views the particular company as unfair and grant a disproportionate amount of monetary reward to the management/board for below par performance.

One can always invest, say, in Berkshire Hathaway instead of Best World. Life is hard (and probably much harder in North Korea), dont make it harder by thinking about how unfair things are.

[weijian]

So, HLF cannot do value accretive moves like SBB on its highly discount-to-NAV shares. It also cannot replicate what the banks are doing in terms of wealth mgt to improve ROE. I will borrow the late Munger's quirky words here - HLF reminds me of a 1 legged man who signed up for an ass-kicking competition. Maybe that is why there are only 3 participants?

In addition, a quick check on HLF Digital on Google Play store- 5k+ downloads with 20 ratings, where 12 of them gave a "1". This isn't off to a good start. 

Let's just hope Kwek Senior reveals his value accretive moves soon, although based on painful experience, I have to say that "hope" in investing is painful (emotionally and financially)

Minutes of the 65th Annual General Meeting held on 24 April 2025

In line with this strategy, the Company has embarked on a digital transformation roadmap, with Phase 1 of HLF Digital successfully launched in 2024. HLF was encouraged by the strong customer adoption of this digital channel

Shareholder B shared Shareholder A’s concerns on the lackluster performance of HLF’s share price, in spite of the Company’s sterling results for FY 2024. He noted that with a net asset value of $4.70, HLF’s share price had underperformed, trading around $2.50 for the past three years. As the Company was restricted under the FCA to implement a share buyback scheme, he hoped that the Board could explore alternative measures to enhance shareholder value, including the possibility of a bonus issue to shareholders, while maintaining the current dividend rate

In addressing the shareholder’s concern, the Chairman said that whilst the Company’s scope of activities was restricted under the FCA, he reassured shareholders that the Board and Management would do their best to bring the Company forward and enhance shareholder value. He said that currently, there were only three finance companies in Singapore including the Company. He believed that it would take some time for the FCA to be amended. In the meantime, he said that Management would continue to explore various ideas and plans to unlock shareholder value, which plans were currently under review and could not be shared with shareholders at this point.

MoM: https://links.sgx.com/FileOpen/HLF_AGM_2...eID=844962

HLF Digital review on Google Play Store: https://play.google.com/store/apps/detai...tail&hl=en

Another year, another wait for HLF OPMIs. Now I understand why it has underperformed the 2 other finance firms in terms of NIM and earnings growth in 2025. Biggest in size among the 3 1-legged participants but turning out to be third (and last).

Minutes of the 66th Annual General Meeting

The CFO first thanked the shareholder for his long-term support. Then, responding to his question, she explained that HLF had a significantly larger loan portfolio compared with the other two finance companies, with a substantial proportion of floating‑rate loans pegged to the Singapore Overnight Rate Average (“SORA”), where the 3-month compounded rate had decreased by 188 basis points in 2025. Thus, the adverse impact on the Company’s earnings was more pronounced than that of its competitors, resulting in a decline in financial performance.

In response, the Chairman assured shareholders that the Company would continue to do its best in any circumstance. However, he recognised that there would be differing views on how best to drive the Company forward. As each company’s operations were different, he said that direct comparisons with other competitors might not always be straightforward. He emphasised the need to take a realistic perspective when assessing the Company’s position, based on factors specific and relevant to the business instead of making broad comparisons that might not be meaningful.

He reiterated that comparisons with the other two finance companies should be viewed in context as their loan books were much smaller and more
concentrated in vehicle financing. In contrast, the Company had a significantly larger loan portfolio of approximately $12 billion. It was noted that car loans were generally fixed-rate and tended to perform better when interest rates declined. As such, the Company had, in recent years, taken steps to increase its fixed-rate loans, including growing its car loan portfolio. However, such rebalancing would take time and must be managed prudently.

https://links.sgx.com/FileOpen/HLF_AGM_2...eID=889534

[Shiyi]

So, HLF cannot do value accretive moves like SBB on its highly discount-to-NAV shares. It also cannot replicate what the banks are doing in terms of wealth mgt to improve ROE. I will borrow the late Munger's quirky words here - HLF reminds me of a 1 legged man who signed up for an ass-kicking competition. Maybe that is why there are only 3 participants?

In addition, a quick check on HLF Digital on Google Play store- 5k+ downloads with 20 ratings, where 12 of them gave a "1". This isn't off to a good start. 

Let's just hope Kwek Senior reveals his value accretive moves soon, although based on painful experience, I have to say that "hope" in investing is painful (emotionally and financially)

Minutes of the 65th Annual General Meeting held on 24 April 2025

In line with this strategy, the Company has embarked on a digital transformation roadmap, with Phase 1 of HLF Digital successfully launched in 2024. HLF was encouraged by the strong customer adoption of this digital channel

Shareholder B shared Shareholder A’s concerns on the lackluster performance of HLF’s share price, in spite of the Company’s sterling results for FY 2024. He noted that with a net asset value of $4.70, HLF’s share price had underperformed, trading around $2.50 for the past three years. As the Company was restricted under the FCA to implement a share buyback scheme, he hoped that the Board could explore alternative measures to enhance shareholder value, including the possibility of a bonus issue to shareholders, while maintaining the current dividend rate

In addressing the shareholder’s concern, the Chairman said that whilst the Company’s scope of activities was restricted under the FCA, he reassured shareholders that the Board and Management would do their best to bring the Company forward and enhance shareholder value. He said that currently, there were only three finance companies in Singapore including the Company. He believed that it would take some time for the FCA to be amended. In the meantime, he said that Management would continue to explore various ideas and plans to unlock shareholder value, which plans were currently under review and could not be shared with shareholders at this point.

MoM: https://links.sgx.com/FileOpen/HLF_AGM_2...eID=844962

HLF Digital review on Google Play Store: https://play.google.com/store/apps/detai...tail&hl=en

Another year, another wait for HLF OPMIs. Now I understand why it has underperformed the 2 other finance firms in terms of NIM and earnings growth in 2025. Biggest in size among the 3 1-legged participants but turning out to be third (and last).

Minutes of the 66th Annual General Meeting

The CFO first thanked the shareholder for his long-term support. Then, responding to his question, she explained that HLF had a significantly larger loan portfolio compared with the other two finance companies, with a substantial proportion of floating‑rate loans pegged to the Singapore Overnight Rate Average (“SORA”), where the 3-month compounded rate had decreased by 188 basis points in 2025. Thus, the adverse impact on the Company’s earnings was more pronounced than that of its competitors, resulting in a decline in financial performance.

In response, the Chairman assured shareholders that the Company would continue to do its best in any circumstance. However, he recognised that there would be differing views on how best to drive the Company forward. As each company’s operations were different, he said that direct comparisons with other competitors might not always be straightforward. He emphasised the need to take a realistic perspective when assessing the Company’s position, based on factors specific and relevant to the business instead of making broad comparisons that might not be meaningful.

He reiterated that comparisons with the other two finance companies should be viewed in context as their loan books were much smaller and more
concentrated in vehicle financing. In contrast, the Company had a significantly larger loan portfolio of approximately $12 billion. It was noted that car loans were generally fixed-rate and tended to perform better when interest rates declined. As such, the Company had, in recent years, taken steps to increase its fixed-rate loans, including growing its car loan portfolio. However, such rebalancing would take time and must be managed prudently.

https://links.sgx.com/FileOpen/HLF_AGM_2...eID=889534

Chairman of Hong Leong Finance said that finance companies in Singapore are not allowed by regulators to buy back shares from the market. However, CEO of Singapura Finance in the AGM said otherwise. (See below)

Anybody can enlighten me as to whether listed finance companies are allowed to buy back shares? 


Singapura Finance AGM minutes:

Will the Company consider share buyback to potentially boost its share price?

Answer (CEO) : While we do not currently have an active share buyback scheme, we have observed an increase in our share price from S$0.65 to S$0.80 year-on-year. We will consider implementing a share buyback initiative at an opportune time, but there are no immediate plans to do so at this juncture.

[weijian]

hi Shiyi,

I asked Gemini if HLF can buy back its own shares and it replied "Yes, a finance company like Hong Leong Finance (HLF) can absolutely perform share buybacks in Singapore. However, because HLF operates under a specific tier of the Singapore financial sector—classified legally as a Finance Company under the Finance Companies Act (FCA)—it is subject to structural capital restrictions that differ from standard commercial banks like DBS or UOB".

Between Chairman Kwek and Gemini (LLM), I don't think the former can be wrong. Therefore I decided to take a quick look at the Finance Companies Act (FCA) and found the response under Part 4 (24), it gave the response below (in italics):

24.—(1)  Except as is otherwise expressly provided by this Act, a finance company must not give, directly or indirectly and whether by means of a loan guarantee or the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of, or for, any shares in the finance company or, where such company is a subsidiary, in its holding company, or in any way purchase, deal in or lend money on its own shares.

This is too lawyer-ish for me (and I suspect the same for most VBs) and so I requested Gemini to simplify it as below:

A finance company cannot lend money, give guarantees, or provide financial help to anyone buying its own shares or its parent company's shares, nor can it buy or trade its own shares.
No financial help: Finance companies cannot help anyone buy their own shares.
No parent company shares: They cannot help anyone buy shares of their parent (holding) company either.
No self-trading: They are strictly banned from buying, trading, or lending money against their own shares.