PETALING JAYA: Hong Leong Industries Bhd
(HLI) is well-positioned to ride on the growing momentum of Malaysia’s motorcycle market, with the upcoming minimum wage hike, parcel hailing driver support initiatives, and election-year timing poised to fuel demand.
In a note, CGS International (CGSI) Research forecasted HLI’s earnings before interest, taxes, depreciation, and amortization margin to increase to 27.1% in the financial year ending June 30, 2027 (FY27), compared to 25.7% in FY26.
The brokerage expects rising motorcycle demand to sustain the company’s revenue and earnings growth in FY27.
According to the research house, Malaysia’s motorcycle sales in the first nine months of 2026 (9M26) grew by 13.9% year-on-year (y-o-y) to 602,129 units, placing the market on track for a potential record high.
“Notably, 9M26 motorcycle sales were almost on par with the auto industry’s 9M26 total industry volume of 602,633 units, underscoring the importance of Malaysia’s two-wheeler market,” the research house added.
CGSI Research projects national motorcycle sales in 2027 to grow by 3% y-o-y, even with a high base.
This, it said, is expected to be driven by the 17.6% minimum wage increase from RM1,700 to RM2,000 effective June 2027, which would likely enhance purchasing power.
A RM300 monthly increment in wage would broadly cover loan installments for Yamaha’s 135LC or Avantiz, potentially supporting demand, it added.
The research house added that factors such as the monthly income support initiative of up-to-RM100 for parcel-hailing riders could encourage gig-economy participation and underpin motorcycle demand, while election years have historically been linked to stronger motorcycle sales.
HLI’s record FY26 earnings, which saw a 15% higher core net profit y-o-y, was partly attributed to higher motorcycle sales volumes and a favourable sales mix, it said.
CGSI Research expects a richer product mix to also support earnings growth in FY27.
The company plans to expand its big-bike segment via selected completely- built-up imports, alongside its existing completely-knocked down models from the second half of FY26 to FY27, with a target overall annual revenue growth of 5% to 10% in the next three years from the base on FY26.
However, the research house remains cautious of growing competition in the national motorcycle market, especially with automatic segment players such as Aveta and QJMotor expanding their footprint with more value-for-money offerings.
Nevertheless, CGSI Research noted that these competitors’ overall sales volumes remain relatively small, and Yamaha currently retains a price premium underpinned by its established brand, product quality, aftersales service network, and strong resale value.
The research house has reiterated its “add” call on HLI, with a lower target price of RM26.23, from RM26.30 previously, after making valuation housekeeping adjustments.
The stock closed at RM16.64 in trading last Friday, up four sen, or 0.24%, from its previous closing price.
