Report Summary

• Hong Leong Asia (HLA) is expected to deliver strong 2H25 and FY25 results, driven by robust growth in both its Building Materials (BM) and Powertrain segments, with estimated FY25 revenue and core PATMI rising 28.5% and 36% year-on-year respectively.
• Key drivers include a multi-year construction upcycle in Singapore, strong demand for data centre backup power and marine engines, and higher engine export volumes from China Yuchai (CYD).
• Target price is raised to S\$4.50/share, backed by a higher valuation of CYD (now pegged to 18x FY27F P/E) and continued solid BM segment earnings, with re-rating catalysts from CYD sales growth and possible MGP listing.
• HLA is improving margins and market share in Singapore, supported by mega infrastructure projects such as Changi T5 and Marina Bay Sands IR2, and aims to expand sales of green and alternative energy products.
• Risks include slower economic recovery in China and delays in major infrastructure project awards in Malaysia.