Hong Leong Asia slid 3.8% to $4.08 on concerns earnings growth in coming quarters may slow due to China's recent tightening measures. The company derives substantial portion of profits from China cautions that Beijing's bank lending curbs may stifle distributors' ability to carry its diesel engines, consumer goods like refrigerators. Rising raw material costs, higher minimum wages may also weigh on performance in coming quarters.
Guidance follows release of 1Q10 results which saw net profit +54% on-year to $35.9m as revenue +37% to $1.49bn. Company also warns proposed strategic review of Xinfei Group may not materialize in view of uncertainty arising from Europe''s debt problems. Hopes of HLA reaping windfall from potential Xinfei divestment largely behind stock's 46.2% gain since beginning 2010. Support at current month low of $3.98.
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