KUALA LUMPUR (May 22): Hong Leong Industries Bhd (KL:HLIND) is a prime candidate for Bursa Malaysia’s MY Value Up initiative, as it is undervalued relative to its peers despite improving returns, according to CGS International.
Hong Leong Industries is the country’s sole manufacturer and distributor of Yamaha motorcycles. It currently trades at 10 times forecast earnings for the financial year ending June 30, 2026 (FY2026), or 6.6 times excluding cash, despite a forecast return on equity of about 23% for FY2026 to FY2028, the firm said in initiating coverage of the company.
Dividend yields are estimated at 6.3% to 7.5% for FY2026-FY2028, the research house said in a note on Friday.
“Hong Leong Industries continues to trade below its long-term mean valuation since 2013 and at a discount to the broader automotive sector,” CGS International said.
The MY Value Up initiative, introduced under the Capital Market Masterplan 2026-2030, is aimed at improving value creation, strengthening financial performance and raising the visibility of Malaysian public listed companies, particularly among global investors.
The programme currently targets 88 companies on Bursa, which collectively account for about 80% of total market capitalisation. The selection is based on the largest companies by market capitalisation, with a threshold of RM4 billion.
At the time of writing on Friday, Hong Leong Industries’ share price was up 54 sen at RM18.44, giving it a market capitalisation of RM6.05 billion.
Hong Leong Industries could also benefit from a valuation rerating under the MY Value Up initiative, which aims to improve the visibility and liquidity of undervalued companies.
It also noted that Hong Leong Industries’ relatively limited free float could benefit from efforts to improve trading liquidity and investor participation.
The house has an 'add' recommendation and a target price of RM26.30. It said Hong Leong Industries’ upcoming product pipeline is increasingly skewed towards premium motorcycles, which should support a richer sales mix and margin expansion.