Kenanga Research maintained its OUTPERFORM call on Hong Leong Industries Bhd (HLIND) with a target price of RM21.00, as the group looks to sustain record earnings through expansion of its Yamaha big-bike business, greater penetration of the motorcycle spare-parts market and digitalisation of its customer loyalty programme.
Following HLIND’s 4QFY26 results briefing, the research house said it remained optimistic about the group’s outlook despite intensifying competition from Chinese motorcycle manufacturers.
A key growth pillar is HLIND’s big-bike business, where it currently commands about 25% of Malaysia’s market. The group aims to increase revenue from the segment by 67% to RM500 million from RM300 million over the next two to three years.
Its strategy will combine completely built-up imports for lower-volume niche models, such as the Yamaha Tenere 700, with greater completely knocked-down localisation for higher-volume models such as the Yamaha Xmax 300.
Spare Parts Market Offers Growth Runway
Kenanga sees another significant opportunity in Malaysia’s motorcycle spare-parts market, estimated to be worth RM2 billion to RM3 billion annually.
HLIND, whose current spare-parts revenue is estimated at around RM200 million, plans to introduce a second Yamaha Genuine Parts brand positioned as a more affordable alternative while retaining Yamaha’s quality standards.
The initiative is intended to help the company compete more effectively against lower-priced aftermarket and non-genuine components.
Kenanga estimates that capturing an additional 5% to 10% of the addressable market over the medium term could meaningfully increase aftermarket revenue and improve margins.
HLIND also plans to digitalise its customer loyalty rewards programme through a new platform expected to come online by end-2026, leveraging a registered membership base of more than one million customers to strengthen brand loyalty and retain market share.
Chinese Motorcycle Brands Step Up Competition
Kenanga acknowledged that Chinese motorcycle manufacturers are expanding aggressively in Malaysia through competitive pricing, feature-rich models and local assembly partnerships.
However, the research house believes Yamaha retains a sizeable loyal customer base because of its established product quality, after-sales network and resale value.
HLIND introduced seven new motorcycle models in FY26, including the Yamaha NVX, YZF-R25, Ego Gear Pro, MT-09, Tenere 700, TMax Tech Max and 135LC.
Over the next two to three years, the group plans to introduce 15 to 17 new and facelifted models, providing a broader product pipeline to support volumes and revenue.
Guocera Targets Margin Of Above 10%
HLIND’s non-core tiles operation, Guocera, is also expected to contribute stronger earnings following the expansion of its manufacturing capacity.
Its new Kluang, Johor plant began production in July 2026, adding between six million and seven million square metres of annual capacity and roughly doubling Guocera’s total capacity to around 13.5 million sq m a year.
The fully automated facility can manufacture larger-format tiles of up to 120cm by 240cm, which command higher margins and offer greater export opportunities.
Guocera currently generates annual revenue of about RM220 million to RM250 million, while large-format porcelain slabs contribute less than 5% of sales. HLIND aims to increase their contribution to around 25% within three years.
With higher production utilisation, a shift towards premium products and growing exports, HLIND expects Guocera’s net profit margin to improve from about 5% currently to more than 10% over the next three years.
Kenanga noted that the tiles division is regarded as a non-core business, with the expansion intended to enhance its value for a potential future divestment.
Net Cash Provides Acquisition Firepower
Kenanga left its earnings forecasts unchanged and maintained its RM21 target price, based on 12 times FY27 forecast earnings, a premium to the passenger vehicle sector’s average forward price-to-earnings multiple of 11 times.
The research house continues to favour HLIND as a proxy for Malaysia’s expanding gig economy, given the importance of motorcycles to delivery services, as well as Yamaha’s leading position in the domestic motorcycle market.
HLIND’s RM2.1 billion net cash position also gives the group capacity to pursue earnings-accretive acquisitions, while its dividend yield of about 6% provides an additional attraction.
Downside risks include weaker discretionary consumer spending, supply-chain disruptions, rising input costs and a global recession that could affect export demand for motorcycles and tiles, Kenanga said.
