PETALING JAYA: Over the next three years, Hong Leong Industries Bhd

plans to launch seven new motorcycle models that are expected to boost volume and margins.

Kenanga Research raised its net profit forecast for Hong Leong Industries’ financial year ending June 30, 2026 (FY26) by 2% to reflect a higher market share of 54% in FY25 of the motorcycle industry volume of 700,000 units.

The research house also raised its FY27 net profit forecast higher to RM492mil although it has yet to factor in the seven new models and the expanded Guocera tile plant.

Kenanga Research also lifted its target price 6% to RM17.70 from RM16.70 a share as it rolled over its valuation year to FY26 from FY25.

This was based on an unchanged price-earnings ratio (PER) of 12 times, a one time multiple premium to the passenger vehicle sector’s average forward PER of 11 times, given its strong market position in the local motorcycle segment.

The group’s prospects are also buoyed by the booming gig economy.

The research house reiterated its “outperform” call on the stock.

The risks to its call include consumers cutting back on discretionary spending, particularly big-ticket items like new motorcycles amid high inflation, supply chain disruptions, escalating input costs and a global recession hurting demand for the export of its motorcycles and tiles.

Kenanga Research said it likes Hong Leong Industries as it is a strong proxy to the booming gig economy given the critical role of motorcycles in executing online deliveries.

Hong Leong Industries’ association with the strong Yamaha motorcycle brand in Malaysia and the brand’s strong market position in the country are also a boon for the company.

This is on top of its solid war chest with net cash of RM1.9bil that could be deployed for earnings-accretive acquisitions,

Its dividend yield is also attractive at 6%, the research house said.

The group introduced the all-new Yamaha PG-1, in August 2024, which is expected to be a new volume-driven model that is expected to be popular with buyers.

It expects production of at least 500 units per month, with production scaled up thereafter based on demand.

It also introduced the fourth generation Yamaha MT09 motorcycle in October 2024, and the XMAX, and TMAX Tech Max scooters this year, which are margin-driven models.

Between FY26 and FY28, it plans to introduce seven new models that are expected to boost volume and margins, with three new models in FY26 alone.

Hong Leong Industries also plans to build a new Guocera tile manufacturing plant with production expected to begin next year.

Fully automated, the plant can produce larger tiles that command a higher margin compared with the existing product line.

The group’s FY25 results rose above Kenanga’s expectation on a record performance.

The group’s FY25 core net profit rose 46% year-on-year, driven by higher production volume for all new motorcycle models, price hikes and a shift toward more premium products with stronger margins.