Positive prospects for Hong Leong Asia’s (HLA) diesel engine and building materials businesses have prompted CGS-CIMB Research analyst Ong Khang Chuen to initiate coverage with an ‘add’ rating and target price of $1.18.

HLA, which is the trade and industry arm of Hong Leong Group has three key business segments - diesel engines, rigid plastic packaging, and building materials. 

Ong’s target price is derived from a sum-of-parts valuation to reflect the three businesses, with a 10% discount applied. The target price translates to a FY2022 ending December P/E of 11.2 times.

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