This article first appeared in Capital, The Edge Malaysia Weekly on March 23, 2026 - March 29, 2026

THE Securities Commission Malaysia (SC) is following the lead of regional counterparts in Japan, South Korea and Singapore by launching a “value up” programme to boost stock valua­tions in the local bourse.

In the recently launched 4th Capital Market Master Plan (CMP4), SC announced the “MY Value Up” programme aimed at prioritising value creation and bolstering financial performance, along with raising the visibility of public-listed companies (PLCs) on Bursa Malaysia.

“As an incentive, consideration will be given to launching [a premium] index for top-performing companies, providing subsidised advisory support and listing-fee rebates to reinforce positive outcomes,” SC states in CMP4.

Since 2023, the Tokyo Stock Exchange has required companies trading below one time price-to-book value, which are generally perceived to be undervalued, to disclose plans to improve corporate governance and capital efficiency.

Similarly, South Korea’s Financial Services Commission launched a programme in February 2024 to encourage companies to enhance share price performance while establishing public support mechanisms to facilitate the value-up initiative.

In Singapore, alongside the S$5 billion (RM15.3 billion) Equity Market Development Programme, authorities unveiled a comparable plan to list stock valuations.

The strong performance of these exchanges over the past two years underscores the impact of such measures, with valuation discounts being the primary driver behind these initiatives. So, which are the outperformers and which are the laggards that need to walk the extra mile?

On Bursa Malaysia, among the 500 largest companies by market capitalisation, 232 — or 46% — are delivering a return on equity (ROE) below 8%.

For companies with a market cap of at least RM1 billion, 33% have an ROE below the same threshold.

Notably, Malaysia’s six largest banks, which collectively account for about 30% of the benchmark FBM KLCI, report an average ROE of 11%. In comparison, Singapore’s three biggest banks average 12.7% — with DBS Group Holdings Ltd at 16.2%, Oversea-Chinese Banking Corp Ltd at 12.6%, and United Overseas Bank Ltd at 9.4%. Singaporean banks generally outperform their Malaysian peers because of their role as international wealth management hubs, stronger fee-based income, superior digitalisation and lower cost-to-income ratios.

Public Bank Bhd (KL:PBBANK) leads locally, with an ROE of 12.3%, followed by CIMB Group Holdings Bhd (KL:CIMB) at 11.3% and Malayan Banking Bhd (KL:MAYBANK) at 11.2%. Smaller banks operate in a different league, however, weighed down by higher funding costs. MBSB Bhd (KL:MBSB) posts just 2.9%, Affin Bank Bhd (KL:AFFIN) 4.5%, and Bank Islam Malaysia Bhd (KL:BIMB) 7.1%.

At the other end of the spectrum, property companies deliver the weakest returns, averaging only 4.4%. Other low-ROE sectors include materials (5.5%), consumer discretionary (7%), oil and gas (9.6%) and transportation (9.8%). These industries are typically capital-intensive, with large asset bases and exposure to cyclical demand or fierce competition.

Property developers, for instance, face long gestation periods and heavy land-banking requirements. Oil and gas and materials demand massive investments in rigs, refineries, mines and plants, whereas transportation relies on costly fleets and infrastructure.

Consumer discretionary firms — selling non-essential goods such as autos, apparel and leisure products — also require significant investment in factories, machinery and retail networks, which depresses ROE.

Within consumer staples, Carlsberg Brewery Malaysia Bhd (KL:CARLSBG), Nestlé (Malaysia) Bhd (KL:NESTLE) and Heineken Malaysia Bhd (KL:HEIM) stand out with ROE of 125.3%, 91.3% and 88.9% respectively — among the highest on the exchange. Yet, underperformers exist, too, such as Kawan Food Bhd (KL:KAWAN) at 2.3% and MSM Malaysia Holdings Bhd (KL:MSM) at 2.8%.

In construction, contractors that are exposed to booming data centre projects report strong ROE: Binastra Corp Bhd (KL:BNASTRA) at 41.6%, Sunway Construction Group Bhd (KL:SUNCON) at 36.8%, MN Holdings Bhd (KL:MNHLDG) at 31%, CBH Engineering Holdings Bhd (KL:CBHB) at 29.4%, and Southern Score Builders Bhd (KL:SSB8) at 26.8%. By contrast, large-cap players such as Gamuda Bhd (KL:GAMUDA) at 8.3%, IJM Corp Bhd (KL:IJM) at 3%, and Malaysian Resources Corp Bhd (KL:MRCB) at 1% post low single-digit ROE, reflecting their property development exposure and land-bank holdings.

Healthcare shows a similar divide. Equipment supplier LAC Med Bhd (KL:LACMED) delivers 36% and fertility specialist Alpha IVF Group Bhd (KL:ALPHA) posts 28.2%. On the other hand, hospital operators deliver a more modest ROE, with KPJ Healthcare Bhd (KL:KPJ) at 13.8%, IHH Healthcare Bhd (KL:IHH) at 7%, and TMC Life Sciences Bhd at 1.5%. Glove makers, after the pandemic boom, now hover at 2% to 4% ROE, with Supermax Corp Bhd (KL:SUPERMX) loss-making.

In IT, Autocount Dotcom Bhd (KL:ADB) and Insights Analytics Bhd (KL:IAB) shine with ROE of 53.3% and 48% respectively, compared to the sector average of 12% (see tables).

High ROE — typically defined as 15% and above — is something that investors, particularly long-term shareholders, are looking for. ROE is a yardstick measuring the return of shareholders’ money invested in a company. Headline ROE figures can, in some cases, obscure underlying structural factors rather than reflect companies’ operational strength.

This is particularly evident among several consumer staples companies on Bursa Malaysia, where ROE levels have reached exceptionally high levels — for example, Carlsberg, Nestlé and Heineken.

A point to note is these companies’ long-standing practice of maintaining high dividend payout ratios, often distributing the bulk of their annual earnings back to shareholders. This limits the accumulation of retained earnings, a major component of shareholders’ equity. As a result, the equity base remains relatively small, mechanically inflating ROE even when net profit growth is modest. In essence, the ratio is boosted not solely by higher earnings but by a compressed denominator.

Such a capital structure is not necessarily a weakness. These companies operate in mature segments of the consumer market, where growth is steady rather than exponential, and capital expenditure (capex) requirements are relatively modest. Instead of pursuing aggressive expansion, they tend to focus on deepening product portfolios to enhance profit margin with minimum capex required.

Their strong, steady cash flow further enables such strategies. With minimal reinvestment needs, excess cash can be returned to shareholders without compromising operational stability. In addition, efficient working capital management — including favourable credit terms with suppliers — reduces reliance on equity funding.

In some cases, companies may also use debt selectively to support operations or ensure consistent dividend payments, further reducing the need for a larger equity buffer. While this strategy enhances capital efficiency, it can also introduce financial risk if not managed prudently.

Beyond the consumer sector, elevated ROE is also observed among selected technology and industrial players. Software provider AutoCount Dotcom Bhd (KL:ADB) and coffee machine component manufacturer Uchi Technologies Bhd (KL:UCHITEC) reported ROE of 53.3% and 49.1% respectively, reflecting their asset-light business models and strong margins.

Another group that has reported high ROE comprises companies that were listed in the past two years. In many instances, these firms undertook substantial dividend payouts prior to listing, effectively reducing their equity base at the point of market debut. This can result in inflated ROE figures in the early years post-listing, which may not be indicative of long-term performance.

Taken together, these observations reinforce the importance of evaluating ROE in context. A high ratio, while attractive, should be assessed alongside factors such as capital structure, earnings quality and sustainability over time.

From an investor’s perspective, while ROE offers insight into accounting returns, market cap growth provides a more direct measure of value creation. Over the past decade, the list of top market-cap gainers on Bursa Malaysia reveals a markedly different set of winners.

For the last 10 years, 156 companies have seen their market cap shrink, according to data compiled by AskEdge. The industrial sector was hit hardest, accounting for 29 of these firms, followed by property with 25, consumer discretionary with 18, consumer staples with 16 and plantations with 11.

The declines were often severe. Thirty-eight companies lost more than 60% of their market value — a collapse that leaves investors needing growth of at least 1.5 times simply to break even. Within this group, 11 companies suffered losses of more than 80%, effectively erasing most of their shareholder value.

Yet, there are also remarkable growth stories. Among the 500 largest companies by market capitalisation, a total of 118 more than doubled their market cap, with property leading the charge at 20, followed by 17 industrials, 12 materials firms, 10 construction players and 10 consumer discretionary companies.

At the top of the list, 22 companies expanded their market cap more than ten-fold, and 15 of those surged beyond 20-fold — transformations that turned modest enterprises into market heavyweights.

It should be noted, however, that some companies among the top gainers are trading at lofty valuations, with price-earnings ratios (PER) ranging from 50 times to 500 times. In addition, about half of the companies on the list were involved in reverse takeovers (RTOs) or similar corporate exercises. In such cases, the transformation of the business may reflect the entry of new assets or management rather than the execution of the original listed entity.

Among the standout performers are companies linked to the global semiconductor industry, which has experienced strong structural growth over the past decade. Leading the pack is Kelington Group Bhd (KL:KGB), whose market cap expanded by an estimated 67-fold, driven by its exposure to the construction of semiconductor fabrication facilities.

Frontken Corp Bhd (KL:FRONTKN) also recorded a substantial 34-fold increase in market value, supported by its strategic investment in a Taiwanese precision cleaning subsidiary with links to Taiwan Semiconductor Manufacturing Co Ltd (TSMC), one of the world’s largest chipmakers.

Automated test equipment providers Pentamaster Corp Bhd (KL:PENTA) and Vitrox Corp Bhd (KL:VITROX) similarly benefited from global technology trends, including the proliferation of semiconductors in electric vehicles, artificial intelligence infrastructure and advanced packaging. Their market cap rose 27-fold and nine-fold respectively over the period.

These companies illustrate how alignment with long-term industry tailwinds can drive sustained value creation, particularly when coupled with successful expansion into global markets.

Press Metal Aluminium Holdings Bhd (KL:PMETAL) offers another example of long-term growth, albeit in a different sector. Already a large-cap company a decade ago, it expanded its market cap about 20 times to roughly RM62 billion, underpinned by its position as the largest integrated aluminium producer in Southeast Asia.

A key competitive advantage lies in its access to relatively low-cost hydropower in Sarawak, which supports cost efficiency in energy-intensive aluminium production. Its associate, PMB Technology Bhd (KL:PMBTECH), has also recorded strong gains, with market cap increasing 31-fold in tandem with rising demand for metallic silicon.

Beyond these high-growth names, several companies with consistent management over the past decade have delivered steady, if less dramatic, gains. Supercomnet Technologies Bhd (KL:SCOMNET) and Focus Point Holdings Bhd (KL:FOCUSP), for instance, recorded market cap increases of 15.7-fold and 7.5-fold respectively, reflecting stable execution and niche positioning.

On the other hand, a number of companies have experienced significant erosion of shareholder value over the same period. These cases highlight the impact of structural industry changes, strategic missteps and financial stress on long-term performance.

Astro Malaysia Holdings Bhd (KL:ASTRO) represents one of the most pronounced examples, with its market cap declining about 98% from RM14.16 billion to about RM340 million. Once dominant in the pay-TV segment, the company has struggled to adapt to the shift towards streaming services and digital media consumption.

The decline in average revenue per user, coupled with unsuccessful pricing strategies and intensifying competition, has weighed on its financial performance. At the same time, advertising revenue has come under pressure as advertisers increasingly allocate budgets to digital and social media platforms.

Vantris Energy Bhd (KL:VANTNRG), formerly known as Sapura Energy Bhd, is another case of substantial value destruction, with its market cap falling 92% from RM12.7 billion to around RM1 billion. The decline reflects a combination of aggressive, debt-funded expansion at an inopportune time, persistent losses and significant asset impairments.

Liquidity constraints have further compounded the challenges, underscoring the risks associated with high leverage in cyclical industries such as oil and gas.

British American Tobacco (Malaysia) Bhd (KL:BAT) has also seen its market value decline nearly 89% over the past decade. The tobacco industry has faced multiple headwinds, including the rise of alternative nicotine products such as vaping, and a growing illicit cigarette market.  In addition, regulatory pressures, including higher excise duties, have compressed margins, which have narrowed from around 20% a decade ago to single-digit levels in recent years.

Genting Bhd (KL:GENTING), a conglomerate with interests in gaming, hospitality and plantations, has similarly experienced a significant decline of close to 70% in its market cap. Its casino operator Genting Malaysia Bhd’s (KL:GENM) market cap has also shrunk substantially. The hike in casino duties in 2019 has weighed on profitability, while reduced dividend payouts have dampened investor appeal.

The company’s removal from the FBM KLCI index at end-2024 further exacerbated selling pressure, as passive funds tracking the benchmark were required to divest their holdings.

See also ‘Dividend payout ratio: What the numbers signal’  

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