Hong Leong Asia: Record earnings on AI and construction growth

Beansprout Pro in brief

• Hong Leong Asia's 1H2026 net profit rose 63.7% year-on-year to S$198.3 million, with PATMI up 64.1% to S$91.9 million, driven by stronger volumes at Yuchai and a maiden contribution from Building Materials' newly acquired Yong Tai Loong.

• AI data-centre demand is emerging as a meaningful and fast-growing driver for Yuchai, with combined high-horsepower engine sales to AI data centres almost doubling year-on-year to 1,800 units in 1H2026, against full-year guidance of more than 3,500 units.

• However, the headline earnings growth was not driven by Powertrain alone, with Building Materials profit after tax also up 49.9% year-on-year on stronger ready-mix and precast volumes and the Yong Tai Loong acquisition.

• Hong Leong Asia also raised its interim dividend by 50% and further strengthened its balance sheet to a net cash position of S$1.11 billion, partly aided by a May 2026 share placement.

• In this update, we examine what is really driving the AI data-centre opportunity at Yuchai, and how Building Materials is benefiting from Singapore's construction upcycle. We also assess how Hong Leong Asia's sum-of-the-parts valuation compares with peers.