This article first appeared in Capital, The Edge Malaysia Weekly on February 9, 2026 - February 15, 2026

A holding company discount occurs when a holding company’s shares trade below its sum-of-parts (SOP) valuation, or the combined market value of the investments it holds.

There are many reasons for this. One may be the higher risk profile associated with diversified conglomerates, stemming from greater complexity as well as regulatory and governance challenges. These risks are often more pronounced compared with “pure-play” companies that focus on just a single business or sector.

In addition, the lack of strong investor interest in some holding companies can result in poor trading liquidity and lower valuations.

That said, some investors may prefer conglomerates for their indirect exposure to various sectors at a cheaper price while they await the potential unlocking of value in the longer term, alongside regular dividends.

Even so, not all holding companies are the same. Some are merely investment holding firms, while others operate businesses of their own in addition to their investment portfolios.

In this article, we take a look at a few holding companies or conglomerates listed on Bursa Malaysia to gauge the prevalence of holding company discounts.

A case in point is Batu Kawan Bhd ­(KL:BKAWAN), which holds a 48.27% stake in integrated palm oil producer Kuala Lumpur Kepong Bhd (KL:KLK), the third-largest listed plantation company in Malaysia.

Batu Kawan’s stake in KLK is valued at RM10.6 billion, or about RM27 per share. Contrast this with Batu Kawan’s share price of RM19.50 and market capitalisation of RM7.56 billion as at last Wednesday.

Beyond the apparent undervaluation of its stake in KLK, the market also appears to be assigning limited value to Batu Kawan’s own businesses, although its net assets per share only stood at RM19.47 as at end-September 2025.

“Batu Kawan is often seen as a [cheaper]  backdoor for those who want exposure to KLK,” a market observer quips.

The parent company derives the bulk of its profits from the palm oil sector via KLK, which also provides exposure to the local property sector. On a standalone basis, Batu Kawan is involved in property development in Australia, but it also has interest in industrial chemicals via its wholly-owned subsidiary, Chemical Company of Malaysia Bhd (CCM), which it acquired in 2021.

Batu Kawan paid RM3.10 per share, or RM292.97 million in total, for a 56.32% stake in CCM from Permodalan Nasional Bhd, and subsequently launched a mandatory general offer for the remaining shares.

CCM has two key subsidiaries — CCM Chemicals, which manufactures chlor-alkali products, and CCM Polymers, which produces performance chemicals for the glove industry.

For its financial year ended Sept 30, 2025 (FY2025), Batu Kawan paid a total dividend per share of 70 sen, equivalent to a dividend payout of 58.3% based on earnings per share of RM1.20 for the year.

The dividend per share is 10 sen more than the 60 sen paid by its subsidiary KLK. A review of dividend payouts of both companies over the last five years shows Batu Kawan paid 10 sen more than its subsidiary in three out of the five financial years. Based on last Wednesday’s closing prices, the dividend yield for KLK and Batu Kawan ranged between 3.04% and 5.07%, and 3.08% and 5.64% respectively for FY2021 to FY2025.

Meanwhile, the recent rally in banking stocks has thrust tycoon Tan Sri Quek Leng Chan’s Hong Leong Financial Group Bhd (KL:HLFG) and Hong Leong Bank Bhd (KL:HLBANK) into the limelight. As a 61.82%-owned subsidiary of HLFG, HLBB contributes about 90% of the group’s earnings.

In terms of market value, HLFG was valued at RM26.12 billion as at last Wednesday — roughly half of HLBB’s RM54.02 billion. HLFG also owns 70% of Hong Leong Assurance Bhd and 81.3% of Hong Leong Capital Bhd (KL:HLCAP), which is involved in investment banking, stockbroking and asset management.

HLFG is among the most inexpensive financial institutions in Malaysia, trading at a price-to-book value (PBV) of 0.8 times and a price-earnings ratio (PER) of eight times, according to AskEdge data. In comparison, HLBB is trading at a PBV of 1.3 times and a PER of 12.2 times.

In a Jan 5 note, AmInvestment Bank Research asserted that HLFG, which has moved into a net cash position, deserves a rerating following the widening of its SOP valuation discount to 39%, compared with its five- and 10-year averages of 35% and 29% respectively. The research house has also switched to the Gordon Growth Model in valuing the conglomerate, a method that estimates intrinsic value based on expected dividends growing at a constant rate.

Then there’s conglomerate Genting Bhd (KL:GENTING), which is viewed as a pure holding company, as it derives nearly all of its earnings from subsidiaries. Once a market darling, the stock has, over the past few years, taken a beating on account of its bet on US ventures, which have yet to pay off.

Genting holds a 52.6% stake in cash-rich Genting Singapore, yet this value has not been fully reflected in Genting’s share price. Genting Singapore is valued at S$8.94 billion (RM27.7 billion), while Genting is valued at about RM11 billion, based on its closing price of RM2.87 last Wednesday.

Genting’s 73.83%-owned subsidiary, Genting Malaysia Bhd (KL:GENM), has been a drag on the group owing to heavy investments in Empire Resorts LLC in the US. Last year, Genting Malaysia announced the acquisition of the remaining 51% stake in Empire Resorts from the founding Lim family’s investment vehicle, Kien Huat Realty III Ltd, for US$41 million (RM176.2 million).

At the same time, Genting Malaysia secured a new casino licence in the US, pointing to further capital expenditure ahead. Overall, Genting remains highly geared, with total borrowings of RM38.88 billion as at end-September 2025 and net debt of RM18.91 billion — exceeding its market capitalisation.

Following the failed privatisation attempt of Genting Malaysia last year, Genting’s share price saw heavy selling pressure, falling about 20% from its recent peak of RM3.52.

In addition to gaming, Genting also owns plantation arm Genting Plantations Bhd (KL:GENP). The latter posted a net profit of RM340.33 million for the first nine months ended Sept 30, 2025, surpassing Genting’s own net profit of RM278.42 million for the same period.

Tycoon Vincent Tan’s Berjaya Corp Bhd (KL:BJCORP) is another conglomerate that does not have a core business of its own. Its listed subsidiaries include Berjaya Food Bhd (KL:BJFOOD), Berjaya Land Bhd (KL:BJLAND), 7-Eleven Malaysia Holdings Bhd (KL:SEM) and REDtone Digital Bhd (KL:REDTONE).

In the financial year ended June 30, 2025, Berjaya Corp swung into the red with a net loss of RM556.07 million compared with a net profit of RM410.44 million a year ago, largely due to losses at Berjaya Food and Berjaya Land.

Another conglomerate worth highlighting is YTL Corp Bhd (KL:YTL). Listed on the local bourse in 1995, YTL Corp started off in the construction business before expanding its footprint into the cement, property, hospitality, utilities and telecommunications sectors, both locally and abroad.

On Bursa Malaysia, the group’s listed subsidiaries include YTL Power International Bhd (KL:YTLPOWR), Malayan Cement Bhd (KL:MCEMENT), YTL Hospitality REIT (KL:YTLREIT) and Ranhill Utilities Bhd (KL:RANHILL). It also has stakes in Singapore-listed NSL Ltd and Starhill Global REIT.

A simple back-of-the-envelope calculation of the value of YTL Corp’s interests in its listed entities works out to some RM27.83 billion, or RM2.39 per share. This represents a 17.15% gap compared with YTL Corp’s closing price last Wednesday of RM2.04. And this is without taking into consideration the value of the group’s own business.

For PPB Group Bhd (KL:PPB), its 18.95%-owned associate, Singapore-listed Wilmar International Ltd, is the key contributor to earnings. As at last Wednesday, PPB’s market capitalisation was RM15.68 billion, while Wilmar’s market value stood at S$21.66 billion (RM67 billion). Kenanga Research is of the view that applying a 20% holding company discount to PPB is appropriate.

Prior to incurring net losses stemming from a US$712 million (RM2.8 billion) fine imposed by Indonesian authorities over alleged export breaches last year, Wilmar contributed 79% of PPB’s profit before tax in the first nine months of financial year 2024 (9MFY2024). This contribution fell sharply to 34% in 9MFY2025.

A current anomaly when it comes to holding company discounts is conglomerate Sunway Bhd (KL:SUNWAY), which has been in the spotlight following its RM11 billion takeover offer for IJM Corp Bhd (KL:IJM).

Sunway is currently valued at a premium to its listed construction arm, but that is mainly because its healthcare arm, Sunway Healthcare Group Bhd in which Sunway holds an 84% stake, is slated for listing on Bursa Malaysia in the first quarter of this year. The healthcare business is the second-largest component of Sunway’s SOP valuation, after property development and investment.

In fact, Sunway has undergone a significant rerating, with its share price having tripled since mid-2023, riding on the back of expectations that shareholders would gain from the proposed listing of Sunway Healthcare.

Currently trading at 34.5 times PER, Sunway is valued at a premium to Sunway Construction Group Bhd (KL:SUNCON), which trades at 25.8 times. Sunway holds a 55% stake in Sunway Construction and a 41% stake in Sunway Real Estate Investment Trust (KL:SUNREIT).

But after Sunway Healthcare makes its debut on Bursa Malaysia, will Sunway continue to boast that premium? In a Jan 12 note, CGS International said the acquisition of IJM could help narrow Sunway’s holding company discount after the listing of Sunway Healthcare.

The sharp rise in Sunway’s share price reinforces the narrative that value can be unlocked when clear rerating catalysts emerge within a conglomerate.

Analysts observe that there are other ways a holding company can mitigate a significant discount — by undertaking share buybacks or paying more generous dividends. 

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