This article first appeared in Capital, The Edge Malaysia Weekly on August 24, 2026 - August 30, 2026

NEUTRAL

KENANGA RESEARCH (AUG 19): Malaysia’s July 2026 new vehicle sales, or total industry volume (TIV), rose 8% month on month (m-o-m) and 3% year on year (y-o-y), supported by ongoing sales promotions, a longer working month and the introduction of Budi Diesel, which boosted commercial vehicle sales by 21% m-o-m. We expect August sales to remain strong, supported by continued promotions and Perodua’s immediate price reductions of up to RM4,700 on its second-generation Axia. Year-to-date (YTD) TIV of 459,000 units (+3%) remains well within our expectations and TIV forecast of 800,000 units for 2026.

National marques continued to gain share, accounting for 66% of TIV in 7M26 (7M25: 63%). Perodua and Proton benefited from sustained demand in the affordable segment and attractive new launches.

In the non-national segment, Toyota led in July with a 32% market share, followed by Honda at 25%. Toyota’s Hilux benefited from Budi Diesel, while its hybrid sales remained strong. BYD ranked third at 6%, supported by stock-clearing promotions, followed by Mazda and Chery at 5% each.

Our 2026 TIV thesis centres on: (i) intensifying discounts and rebates, which could pressure margins, prompting automakers to focus on higher-margin segments; (ii) the gradual implementation of the new open-market-value (OMV) excise duty regime, now delayed to January 2027 or potentially beyond, alongside a RM200,000 pre-tax cost, insurance and freight (CIF) floor for imported electric vehicles (EVs); (iii) rising Chinese vehicle penetration as manufacturers localise production; (iv) sustained affordable-segment demand, with national marques expected to retain a 67% market share; (v) new hire-purchase policies aimed at creating a fairer lending environment; (vi) a stable labour market; and (vii) attractive value-for-money launches (leaning towards value-for-money offerings).

Industry earnings visibility remains healthy, underpinned by a 170,000-unit booking backlog as at end-July, with more than half comprising new models. EV sales should remain robust as automakers clear completely built-up (CBU) inventories while transitioning to completely knocked down (CKD) production. Proton could maintain a 40% to 50% share of EV sales, supported by its locally assembled e.MAS models.

We remain balanced on EV adoption, expecting a gradual transition as infrastructure constraints and subsidised fuel prices continue to support internal combustion engine demand.

We remain “neutral” on the sector. Our sector top picks are Bermaz Auto Bhd (KL:BAUTO) (outperform; target price: RM1.22) and Sime Darby Bhd (KL:SIME) (outperform; TP: RM2.75), offering attractive dividend yields of 10% and 6%, respectively.

Target price: RM1.05 ADD

CGS INTERNATIONAL (AUG 18): Kumpulan Kitacon Bhd (KL:KITACON) posted core net profit of RM12.5 million in 2QFY26 (-3.4% q-o-q, +7.6% y-o-y). This brings 1HFY26 core net profit to RM25.4 million (-2% y-o-y) or 46% of our FY26F forecast. The shortfall was due to weaker 1H26 gross margins of 14.1% (1H25: 15.2%), mainly from higher raw material and diesel costs.

As at August 2026, the order book stood at RM1.24 billion (1.5 times FY25 revenue), providing healthy earnings visibility. YTD wins of RM190 million were below expectations amid softer property activity and elevated costs. However, key clients Sime Darby Property Bhd (KL:SIMEPROP), S P Setia Bhd (KL:SPSETIA) and Eco World Development Group Bhd (KL:ECOWLD) maintained FY26F sales targets, while the RM1.26 billion tender book should support stronger 2H26 wins. Industrial projects and township developments such as City of Elmina and Bandar Bukit Raja offer further upside.

We cut FY26F-28F EPS by 13.5%/14.3%/12.8% on lower contract-win assumptions and margins, but raise DPS to four sen, implying 6% yield. We reiterate “add” with a lower TP of RM1.05. 

Target price: RM3.84 BUY 

AMBANK RESEARCH (AUG 19): Mega First Corp Bhd (KL:MFCB), which is involved in hydropower generation, solar power, lime mining and packaging, saw its net profit decline 17.5% y-o-y to RM121.7 million in the first half ended June 30, 2026 (1HFY26) on a higher effective tax rate and increased losses at its 50%-owned oleochemical joint venture Edenor Technology Sdn Bhd. Edenor’s losses widened to RM34.8 million in 2QFY26 from RM23.4 million in 1QFY26, mainly due to staff retrenchment costs. Recall that Edenor has been placed under a judicial management order.

MFCB’s results were below our estimates as its effective tax rate was 12% in 1HFY26 versus our FY26F assumption of 8%. We have, therefore, cut our FY26F net profit forecast by 4.8%.

We believe FY26F will be a kitchen-sinking year for MFCB, with FY27F likely to improve in the absence of Edenor. We maintain our “buy” rating and unchanged TP of RM3.84, based on a FY27F PER of 10 times, in line with its five-year average. MFCB trades at an undemanding FY27F PER of 7.4 times.

Target price: RM1.36 OUTPERFORM

PUBLICINVEST RESEARCH (AUG 19): Kossan Rubber Industries Bhd (KL:KOSSAN) is acquiring 100% of Inout Enterprise Pte Ltd (IOS) and a direct 51% stake in Inout Enterprise (Thailand) Ltd (IOT) for RM48.4 million in cash. The acquisition will be funded through internally generated funds and is expected to be completed by 1QFY27. Following the acquisition and restructuring, Kossan will effectively own 100% of Cleanera HK Ltd, Inout Enterprise (M) Sdn Bhd and Greenphils Inc, alongside Verbinden Pte Ltd’s transferred cleanroom distribution business.

We estimate the acquisition implies an FY25 PER of 11 times, based on ownership-adjusted profit after tax (PAT) of RM4.3 million. We view the valuation as fair, with upside dependent on distribution synergies and Cleanera’s targeted volume growth. Strategically, the acquisition supports management’s goal of doubling annual cleanroom glove volumes from 300 million to 400 million to 600 million to 800 million pieces by FY27F. 

We maintain our “outperform” call and RM1.36 TP, based on 0.88 times CY27F P/B, in line with the +0.5SD 1-year historical mean.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.