Hong Leong Asia (SGX:H22)’s 48.7% owned subsidiary China Yuchai International (CYD US) announced that its 71.4% owned subsidiary, Guangxi Yuchai Marine & Genset Power (MGP) has filed to list on the Hong Kong Stock Exchange.
Filing for an IPO in Asia’s hottest market.
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A high-growth business.
In its draft prospectus, we note that MGP’s financials and profitability have been, and likely will continue to be, one of the major drivers of CYD’s profitability. As can be seen in the table overleaf, MGP generated RMB5b in revenue for 9M25 and RMB762m in net profit, implying a 15% net margin.
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Timeline not determined, but visibility will improve.
While the timeline for the IPO has yet to be determined, we believe the market will value the ability to have a look-through valuation for CYD. Given the strength of the numbers for MGP, we believe that the market will have to upgrade valuations.
Our valuation for CYD used a target P/E of 12x which now appears conservative relative to the historical growth that its subsidiary has experienced in the past 12 months. As a result, we have upgraded this to 15x which may still be conservative relative to the HSI’s consensus 2026F P/E of 12.1x.
Policy tailwinds remain compelling key.
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Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
