This article first appeared in The Edge Malaysia Weekly on August 3, 2026 - August 9, 2026

BURSA Malaysia has long been home to a number of companies controlled by foreign strategic shareholders, many of them subsidiaries of multinational corporations with strong balance sheets, resilient earnings and long records of dividend payments.

Yet many have struggled to attract investor interest because of their limited free float and chronically thin trading volumes, leaving their shares persistently illiquid and often trading at subdued valuations.

Several have already exited the exchange. JT International Bhd was taken private by its parent Japan Tobacco Inc in 2014. More recently, the controlling foreign shareholders of DKSH Holdings (Malaysia) Bhd (KL:DKSH) and Ajinomoto (Malaysia) Bhd (KL:AJI) launched takeover offers, highlighting how concentrated ownership and weak market liquidity can reduce the benefits of remaining listed. As at June 30, 2026, Switzerland-based DKSH Holdings Ltd owned 74.31% of DKSH Malaysia, while Japan-based Ajinomoto Co Inc held 50.38% of Ajinomoto Malaysia.

For long-term investors, however, illiquidity is often a secondary concern. More important is whether management is generating attractive returns from shareholders’ capital.

For example, minority shareholders at DKSH Malaysia voted down the RM6.15 per share offer from its Swiss parent in April, arguing the bid undervalued the company. Ajinomoto Malaysia’s Japanese controlling shareholder is now awaiting the outcome of an extraordinary general meeting, where investors will decide the fate of its privatisation proposal.

Many foreign-controlled companies on Bursa generate healthy operating cash flow, carry little or no debt and have accumulated sizeable cash balances. Yet despite their financial strength and dependable dividends, several of them continue to see their shares trade on modest valuations.

A key issue appears to be capital allocation.

Cash that cannot be deployed to projects that can earn returns above the company’s cost of capital should generally be returned to shareholders through higher dividends or share buybacks. Allowing excess cash to accumulate without a clear strategy increases the opportunity cost for shareholders, depresses return on equity (ROE) and can weigh on valuation multiples.

This debate has become increasingly relevant among the foreign-controlled companies on Bursa. While some could eventually become privatisation candidates because of their concentrated ownership and limited liquidity, a more immediate question is whether conservative capital management is preventing shareholders from realising the full value of the underlying businesses.

The Edge examines five foreign-­controlled companies whose minority shareholders are predominantly long-term investors with relatively small stakes. All but British American Tobacco (Malaysia) Bhd (KL:BAT) have posted negative share-price returns this year. Despite its relative outperformance, the tobacco company remains widely seen as a potential privatisation candidate because of its concentrated ownership and increasingly challenging operating environment.

Despite a debt-free balance sheet and RM468.75 million in cash and cash equivalents as at March 31, 2026, which translates into RM7.72 per share, Panasonic Manufacturing Malaysia Bhd’s (KL:PANAMY) share price has fallen more than 80% over the past five years and 43% over the past 12 months, closing at RM5.99 last Wednesday (July 29). The company’s cash holdings exceed its market capitalisation of RM360 million, implying that investors are valuing the operating business at a substantial discount.

Based on its dividend per share (DPS) of 62 sen for the financial year ended March 31, 2025 (FY2025), Panasonic Malaysia’s dividend yield stood at 10.35%. However, dividend reliability remains a key concern as payouts have become increasingly inconsistent in recent years. Its DPS fell to 48 sen in FY2026 from 62 sen a year earlier, well below the bumper payouts of RM1.36 and RM1.22 in FY2024 and FY2023 respectively.

According to Bloomberg data, Panasonic Malaysia retained most of its FY2025 earnings, slashing its dividend payout ratio to 26.9% from 179.1% in FY2024, despite already sitting on substantial cash reserves. ROE, meanwhile, declined to 5.9% from 11.4% a year earlier, illustrating how surplus cash can dilute shareholder returns when left idle.

The company’s FY2025 annual report shows that a substantial portion of its excess cash is placed with related party Panasonic Financial Centre (Malaysia) Sdn Bhd, earning a weighted average fixed deposit rate of 3.78% in FY2025, down slightly from 3.8% in FY2024. While this provides a safe return, it is well below the return shareholders would typically expect from equity capital, reinforcing concerns that the balance sheet is being managed conservatively at the expense of shareholder value.

That is the crux of the debate raised by minority shareholders. Singapore-based Pangolin Investment Management Pte Ltd argues that excess capital should either be invested to generate superior returns or distributed through higher dividends.

Founder and director James Hay contends that after providing for working capital and capital expenditure requirements, surplus cash should not remain indefinitely on the balance sheet, particularly when it suppresses ROE and limits the company’s valuation. In his view, a significantly higher payout ratio would improve capital efficiency and could prompt a market rerating without compromising on Panasonic Malaysia’s financial strength.

Pangolin Investment Management, via its long-term value fund Pangolin Asia Fund, owned a 1.6% stake in Panasonic Malaysia before selling out in 2018.

Japan-based Panasonic Holdings Corp remains the largest shareholder of Panasonic Malaysia with a 47.45% stake. The Employees Provident Fund (EPF), previously the second-largest shareholder with a 10.71% stake as at June 30, 2025, ceased to be a substantial shareholder on July 2 this year after a series of disposals reduced its equity interest below the 5% statutory threshold.

Kumpulan Wang Persaraan (Diperbadankan) (KWAP), which held a 5.69% stake as at June 30, 2025, also ceased to be a substantial shareholder on Sept 23, 2025 after its equity interest fell below the 5% threshold.

Unlike Panasonic Malaysia, Nestlé (Malaysia) Bhd (KL:NESTLE) demonstrates a different approach to capital management. Rather than accumulating cash, the food and beverage (F&B) manufacturer has historically maintained a lean balance sheet and used borrowings as part of its capital structure. As at June 30, 2026, it held just RM5.04 million in cash while borrowings had fallen to RM363.2 million from RM788.5 million a year earlier.

Despite carrying debt, Nestlé Malaysia has consistently generated sufficient operating cash flow to fund dividends, with payout ratios hovering around or above 100% in recent years.

Although its historical dividend yield remained modest at 1.9% in the financial year ended Dec 31, 2025 (FY2025), compared with 1.8% in FY2024 and 2.3% in FY2023, the company has prioritised returning earnings to shareholders instead of allowing excess capital to accumulate.

Its share price had gained 12% over the past year to close at RM96.78 last Wednesday, although the stock remains 21% below its one-year high of RM122.20 reached earlier this year. Of the 13 analysts covering the stock, nine have a “buy” recommendation, three have a “hold” call and one has a “sell” rating. The consensus 12-month target price stands at RM114.93, implying upside potential of 19% from its latest closing price. Based on consensus DPS of  RM2.598 for FY2026, the stock offers a prospective yield of 2.61%.

Ownership of Nestlé Malaysia remains highly concentrated, with Switzerland-based Société des Produits Nestlé SA being the largest shareholder with a 72.61% stake as at Feb 28, 2026. EPF is the second-largest shareholder with 7.46% equity interest.

Fraser & Neave Holdings Bhd (KL:F&N) occupies the middle ground. Although earnings have come under pressure this year from higher costs linked to hostilities in the Middle East, the F&B company has consistently generated double-digit ROE of between 12.8% and 16.1% over the past five years while maintaining steady dividend growth.

F&N’s share price has been sliding since the company reported weaker-than-expected second-quarter earnings on April 30. The stock had fallen 12% since to close at RM27.40 last Wednesday, extending its decline to 21% for the year.

Higher costs arising from the Middle East hostilities weighed on its profitability, resulting in its net profit for the three months ended March 31, 2026 (2QFY2026) falling 31% to RM96.28 million from RM140.34 million a year earlier, while revenue declined 8% year on year (y-o-y) to RM1.23 billion.

Following the results, CGS International cut its FY2026, FY2027, FY2028 and FY2029 core profit forecasts by 25.6%, 13.5%, 9.2% and 4.2% respectively in a May 4 report.

Despite the weaker earnings outlook, F&N has maintained a consistent dividend track record. It paid a dividend of 65 sen per share for the financial year ended Sept 30, 2025 (FY2025), representing a payout ratio of 46.8%, up from 63 sen per share and 42.5% respectively in FY2024. Looking ahead, CGS International has projected DPS of 61 sen for FY2026 and 94 sen for FY2027, implying yields of 2.05% and 3.13% respectively based on its last traded price.

The group also retains a strong balance sheet, with a net cash position of RM16.13 million as at end-March 2026. Cash and cash equivalents stood at RM606.13 million, compared with total loans and borrowings of RM590 million.

Singapore-listed Fraser and Neave Ltd remains the controlling shareholder with a 55.475% stake, followed by EPF (16.539%) and Amanahraya Trustees Bhd — Amanah Saham Bumiputera (5.306%).

According to CGS International, F&N’s main risks include a significant deterioration in the health of its dairy herd, weaker consumer sentiment in Malaysia and Thailand that could weigh on revenue, and an inability to fully pass on higher costs to consumers.

Heineken Malaysia Bhd (KL:HEIM) has also demonstrated disciplined capital management, maintaining a debt-free balance sheet while returning most of its earnings to shareholders. Nevertheless, the brewery has come under pressure from softer consumer spending and illicit beer sales.

Net profit for the first quarter ended March 31, 2026 (1QFY2026) fell 14% to RM104.46 million as revenue declined 13% y-o-y to RM664.21 million, reflecting weaker consumer sentiment, geopolitical developments that weighed on spending and the group’s deliberate reduction of ex-brewery sales to better align with market demand.

The illicit beer market remains a key challenge, exacerbated by an excise duty increase of 10% in November 2025. Industry estimates suggest that illicit products account for about a quarter of Malaysia’s beer market, resulting in an annual tax revenue loss of roughly RM1.2 billion. For the financial year ended Dec 31, 2025 (FY2025), its net profit slipped 2% to RM459.34 million from RM466.75 million in the previous year, while revenue was flat at RM2.8 billion.

Despite the weaker operating environment, Heineken has maintained a generous dividend policy. Total dividends declared for FY2025 amounted to RM1.52 per share, representing a payout ratio of more than 100% and its highest dividend yield since the Covid-19 pandemic at 6.6%. After falling 19% over the past year to last Wednesday’s close of RM19.28, its historical dividend yield works out to 7.88%.

The company ended March 2026 with RM126.91 million in cash and no borrowings after repaying RM150 million of debt during the period. Unlike some of its cash-rich peers, Heineken has largely returned surplus capital to shareholders rather than allowing cash to accumulate on its balance sheet, reflecting a more efficient approach to capital allocation.

Following the first-quarter results, Maybank Investment Bank Research lowered its FY2026, FY2027 and FY2028 earnings forecasts by 8%, 7% and 6% respectively, after cutting its industry volume growth assumptions to -3%, +3% and +3% from an earlier expectation of 3% annual growth. In a May 19 report, the research house nevertheless continues to forecast a dividend payout ratio of 100% over the FY2026 to FY2028 period, translating into an estimated DPS of RM1.427, RM1.51 and RM1.544 respectively.

European brewery Heineken NV remains the controlling shareholder with a 51% stake, while institutional investors collectively hold 19.06%.

British American Tobacco (Malaysia) Bhd (BAT Malaysia), whose brands include Dunhill, Peter Stuyvesant and Rothmans, stands apart from the other companies because of the structural challenges facing Malaysia’s tobacco industry.

British American Tobacco Holdings (Malaysia) BV owns 50% of the company, and market observers continue to view BAT Malaysia as a potential privatisation candidate given its concentrated ownership and increasingly challenging operating environment. It is Malaysia’s only listed tobacco company.

The group continues to contend with higher excise duty, stringent tobacco regulations and persistent illicit cigarette sales. The government raised the excise duty by two sen per stick, or 40 sen per pack of 20 cigarettes, in November 2025, while BAT Malaysia withdrew its Vuse vapour products from the Malaysian market in the third quarter of 2025 to comply with the Control of Smoking Products for Public Health Act 2024 (Act 852). After declining from 55% in 2024 to 54.4% in 2025, the illicit cigarette incidence reversed course to 56.2% in the second quarter of 2026.

Those headwinds weighed heavily on first-half results. BAT Malaysia reported a net loss of RM24.51 million for the six months ended June 30, 2026 (1HFY2026), compared with a net profit of RM74.22 million a year earlier, largely due to one-off costs related to the retail display ban and redundancies arising from workforce optimisation under its new route-to-market model. Revenue fell 29% to RM675.59 million from RM946.74 million on lower sales volumes.

The weak results triggered a sharp sell-off in its shares. Its share price fell 18% to RM5.04 on May 26 from RM6.17 a day earlier and has continued to decline, closing at RM4.88 last Wednesday.

Unlike several of the cash-rich companies in this group, BAT Malaysia carries net debt. As at end-June 2026, it had cash and bank balances of RM32.04 million against borrowings of RM791.29 million, resulting in a net debt position of RM759.25 million.

Despite the difficult operating environment, the company has maintained a long record of paying dividends. It declared a total dividend of 63.5 sen per share for the financial year ended Dec 31, 2025 (FY2025). Bloomberg data shows its payout ratio eased to 55.71% from 91.99% in FY2024 and 101.17% in FY2023 as earnings came under pressure.

BAT Malaysia continued to generate a high ROE of 42.6% in FY2025, although this has steadily declined from 74% in FY2021.

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