Wednesday, September 17th, 2025

Hong Leong Asia Eyes Growth in JS-SEZ, Construction Boom & China Recovery

📈 Strong Earnings & Optimistic Outlook
Hong Leong Asia (HLA) posted a 4.1% y-o-y revenue growth to $4.25 billion in FY2024, while earnings surged 35.3% to $87.8 million, the highest since FY2011. The growth was fueled by a strong order book in its building materials unit (BMU) and higher powertrain sales from its NYSE-listed China Yuchai International. CEO Stephen Ho remains confident about further expansion, despite concerns over China’s economic recovery.


🏗️ Construction Boom Boosts Building Materials Unit (BMU)

With Singapore’s construction industry booming, HLA’s BMU revenue grew 4.9% y-o-y to $682.3 million, with profit after tax rising 13.1% to $86.2 million. The segment, which includes cement, precast concrete, ready-mix concrete (RMC), and quarry products, remains one of the largest building materials suppliers in Singapore.

  • Key Developments in BMU:
    • Singapore’s precast revenues were slower in FY2024 but are expected to rebound in 2025.
    • Johor-Singapore Special Economic Zone (JS-SEZ) will fuel future cement demand in Malaysia.
    • Automation investments and an expanded fleet of 12-cubic-metre concrete mixers will enhance efficiency.
    • The HL-Sunway Prefab Hub, launched in July 2023, can supply precast elements for 2,500 dwelling units annually.

⚙️ Powertrain Growth Amid China’s Slow Recovery

HLA’s China Yuchai International delivered $3.55 billion in revenue (+4.2% y-o-y), with profit after tax climbing 17.2% to $89.6 million. A 13.7% increase in powertrain sales drove these results.

🔹 China’s Recovery Remains Uncertain
CEO Stephen Ho acknowledged China’s sluggish domestic consumption, affecting truck and bus demand. However, he remains optimistic for a rebound, saying, “When logistics and tourism pick up, heavy and medium-duty truck sales should follow.”

🔹 Green Investments for Future Growth
China Yuchai is investing in cleaner energy technologies, including hydrogen engines, batteries, automotive chips, and sensors, to secure long-term sustainability.


💰 Analysts Bullish on HLA’s Future Growth

Analyst Ratings & Target Prices:

  • UOB Kay Hian (Llelleythan Tan & John Cheong): $1.11, revised FY2025-FY2026 PATMI estimates up 2%-3%.
  • DBS (Dale Lai & Derek Tan): Raised target price to $1.60 from $1.28, citing earnings momentum.

🔹 Dividend Surprise: HLA announced a final dividend of 3 cents per share, reinforcing confidence in its financial strength.

🔹 Valuation: Trading at $1.02 per share, HLA has an attractive forward P/B ratio of 0.6x and is set for an earnings CAGR of 15% from FY2024-FY2027.


🚀 Future Outlook: Positioned for Expansion

With a robust construction pipeline, expansion in JS-SEZ, and China Yuchai’s green initiatives, HLA is primed for continued growth. If China’s economy rebounds, truck and engine demand could accelerate, further boosting earnings.
Thank you

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