Hong Leong Asia (S$3.40) - Best of both worlds HLA offers earnings visibility from domestic growth cycles in both Singapore and China. This should insulate its earnings from macro uncertainties facing the global economy. HLA’s Building Materials Group (BMG) is a beneficiary from Singapore construction boom. Outlook is bright going into 2008 with sustained ready-mix concrete volume growth from commencement of Marina IR deliveries, en-bloc construction projects and large-scale projects, such as BFC. Xinfei offers exposure to China’s rising consumerism in third and fourth-tier cities. In addition, Xinfei will be benefiting from a further 30% capacity expansion in 2008. Meanwhile, Yuchai has turned around convincingly with strong pick-up in volumes and significant product mix improvements. Maintain Outperform and sum-of-the-parts target price of S$5.54. Valuations at 9.9x CY09 P/E appear attractive relative to its 3-year core EPS CAGR of 48%.
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