22/04/2026

ESG WEDNESDAY | APR 22, 2026

12

Iran war energy shock exposes Asean vulnerability

Assessing Malaysia’s end-of-life

vehicle readiness PETALING JAYA: Malaysia is the largest automotive market in Southeast Asia, with over 821,000 new vehicles registered in 2025. Under the National Automotive Policy (NAP) 2020, the government targets total industry volume (TIV) of 1.22m units by 2030, implying incremental growth of 400,000 units, or a five year CAGR of 8.25%. According to CIMB Securities, the rollout of a comprehensive end of life vehicle (ELV) policy is a critical catalyst for achieving this target. Beyond supporting industry volume growth, an effective ELV framework addresses environmental, economic, and regulatory challenges, including hazardous waste management, material recovery, abandoned vehicles, and road safety. In addition, rising EV adoption is expected to increase both the volume and complexity of ELVs, particularly owing to EV batteries, reinforcing the need for robust and structured recycling systems to support the long term sustainability of Malaysia’s automotive ecosystem. CIMB Securities said Malaysia has begun exploring initiatives to formalise the vehicle recycling ecosystem, notably through the development of Authorised Automotive Treatment Facilities (AATFs), coordinated by MARii under the Ministry of Investment, Trade and Industry. AATFs are certified centres responsible for the depollution, dismantling, and recovery of reusable and recyclable vehicle materials in line with environmental standards. Currently, five registered facilities operate with monthly capacities of 300-1,500 units, while NAP 2020 targets the rollout of 21 AATFs by 2030. However, AATF development remains at an early stage, with the ELV ecosystem largely reliant on informal dismantlers. Effective implementation will require stronger policy support, firmer regulatory enforcement, and broader industry participation. “We think an ELV policy would be broadly positive for the automotive industry volume, with the national brands (Perodua and Proton) as the key beneficiaries, as it enforces a structural replacement cycle across Malaysia’s ageing vehicle fleet,” said CIMB Securities. It said this will accelerate entry level demand, where national brands retain clear advantages in affordability, financing access, and nationwide distribution, driving higher production volumes and improved operating leverage. Beyond the near term demand boost, it added, ELV implementation also unlocks longer term value through the development of a circular economy, catalysing a domestic recycling ecosystem encompassing dismantling and AATF as well as metal recovery. This would create a sustainable supply of scrap materials while anchoring ESG driven industrial growth within Malaysia.

notable strides in sustainability commitments. Yet translating these pledges into bankable projects remains the missing link. “We now need to see projects developed and refined further, then the money will come,” he said. On the global stage, Asean continues to position itself as a resilient growth hub, supported by favourable demographics, digitalisation and trade integration. Humphrey described the region as “one of the few economic bright spots” globally, with strong

At the same time, he cautioned that short-term instability could paradoxically entrench fossil fuel reliance if governments prioritise energy security over transition goals in the near term. Against this backdrop, co operation between Asean and Europe is expected to play a more concrete role, particularly in infrastructure and financing. The European Commission has pledged stronger support for the Asean Power Grid under its Global

o Current volatility may act as catalyst to accelerate structural shifts even as region pursues transition

Ű BY DEEPALAKSHMI MANICKAM sunbiz@thesundaily.com

KUALA LUMPUR: RHB Investment Bank Bhd (RHB IB) has selected five Malaysian companies, namely Binastra Corporation Bhd, Eco-Shop Marketing Bhd, Kelington Group Bhd, LAC Med Bhd, and MR DIY Group (M) Bhd, as its top environmental, social, and governance (ESG) investment Diamonds in the Rough for 2026. In the 11th edition of its annual thematic research note, it said that the stock selections were based on five key criteria, namely return on equity (ROE) of 15% or higher; 2026 net debt/shareholder funds of below 0.7 times; expanding margins in 2026, compared to that of 2025; trading at valuations below their respective industry averages; and ESG score being above their country medians. The Malaysian companies included in this edition were comparable to their Asean counterparts in one key aspect, as they met all five selection criteria, it said. “Our selection process combined both quantitative (screening) and qualitative (bottom up analyses, mosaic theory, and industry expert insights) methodologies. “All selected stocks fall within our coverage universe, ensuring a deep understanding of their business models, financial health, and management track records,” it said. RHB IB projected Binastra’s ROE at a strong 43.8% in the financial year of 2027 (FY2027), up from 43.7% in FY2026. PETALING JAYA: Geopolitical tensions around the Strait of Hormuz have laid bare Asean’s lingering exposure to external energy shocks, even as the region accelerates its transition agenda, says Chris Humphrey ( pic ). In an exclusive interview with SunBiz, the executive director of the EU-Asean Business Council pointed to recent disruptions in liquefied natural gas (LNG) flows as a stark reminder of Asean’s dependence on Middle Eastern oil, with ripple effects already surfacing across economies. “The conflict has repercussions far beyond the immediate theatre,” he said, citing emergency measures such as the Philippines’ declaration of a national energy emergency, work-from-home mandates for civil servants, and fuel rationing in parts of the region. The knock-on effects are immediate and broad-based. Escalating fuel costs are feeding into inflationary pressures and operational challenges for businesses, reinforcing the urgency of diversifying energy sources. Humphrey noted that while Asean’s energy transition is already underway, the current volatility may act as a catalyst to accelerate structural shifts. “The pace now needs to speed up, not only towards renewables, but also to reduce oil dependency,” he said.

potential to attract diversified supply chains. While concerns over stricter European sustainability regulations previously weighed on exporters, recent adjustments under the EU’s omnibus package have eased some compliance burdens. Remaining rules, he noted, apply equally to both European and Asean-based firms. Still, companies that lag in aligning with EU sustainability standards risk losing market access. Encouragingly, Humphrey said European firms are actively working with Asean suppliers to close compliance gaps and meet reporting requirements. Looking ahead, expectations are building around the upcoming Asean-EU Sustainability Summit, which will convene policymakers and industry players to tackle pressing ESG issues. Key focus areas include advancing the circular economy, strengthening sustainable agriculture and animal health practices, improving ESG reporting standards, and addressing illicit trade that undermines public health and government revenues. Humphrey expects robust discussions but emphasised that outcomes must remain practical. “Sustainability needs to stay at the forefront of public policy, while ensuring that the needs of businesses are maintained,” he concluded. ringgit and rising volumes should drive margin improvement,” it said. As for Kelington Group, RHB IB projected the company’s ROEs to improve to 28.9% and 29.7% in FY2026 and FY2027, from 26.7% in FY2025, underpinned by double-digit earnings growth and strong orderbook replenishment from new market access. Meanwhile, RHB IB said LAC Med’s ROE is expected to exceed 21% in 2026-2028, although this may moderate slightly as the company expands its equipment-as-a-service segment, which requires capitalising assets on the balance sheet. “Despite this, the segment remains margin accretive, with gross profit margins potentially reaching 40%. “Net margins would remain stable at approximately 11.4% to 11.5% in the 2026-2028 forecast, versus 12.1% in 2025,” it said. RHB also projected that MR DIY Group’s ROAE would expand to 36% to 39% in 2026-2028, from 32% in FY2025, underpinned by solid earnings delivery, supported by outlet expansion and strategies to lift same-store sales growth. “Meanwhile, the commitment to keep its dividend payout ratio at above 100% in FY2026 forecast will lead to a more efficient capital structure and higher ROAE,” it said, adding that the net margin would remain solid at 13.2% to 13.5% in 2026-2028 forecast versus 12.8% in 2025,” it said. – Bernama

Gateway initiative, positioning cross-border electricity integration as a key enabler of both energy security and decarbonisation. “The Asean Power Grid is essential to even out supply and demand differences and bring cleaner energy across the region,” Humphrey said, adding that European businesses and financial institutions are ready to back projects beyond policy alignment. However, the bigger constraint lies not in capital availability but in execution. “There is no shortage of money,” he said plainly. “The challenge is the state of project development and the level of certainty investors need.” Despite the introduction of frameworks such as the Asean Taxonomy, gaps remain in project readiness, regulatory clarity and financial structuring. Investors continue to seek stronger government guarantees on tariffs, payment mechanisms and long-term policy direction. Humphrey stressed that closer coordination with multilateral lenders such as the Asian Development Bank and the European Investment Bank will be critical to unlocking blended finance solutions at scale. From a corporate standpoint, Asean has made “It has approximately RM7 billion unbilled orderbook, with 30% to 35% from Johor Bahru and 10% to 15% from data centre (DC) projects, supports earnings momentum as Johor jobs secured in FY2026 move into the higher end of the ‘S-curve’ from FY2027,” it said. The bank expected Binastra to remain in a net cash position in FY2027, giving it room to pursue more projects beyond DCs. “Meanwhile, DC jobs should also support cash flow, given their faster turnaround. We expect net margins to stay healthy, at above seven per cent from FY2027 to FY2029, versus 8.9% in FY2026,” it said. Meanwhile, RHB IB forecasted Eco-Shop Marketing’s return on average equity (ROAE) to trend above 26% in FY2027-FY2028. “Accelerating store expansion to deepen market penetration should be the primary driver to robust earnings growth (three-year compound annual growth rate: 19%) and ROAE ahead. “In addition, its profit margin should also see healthy growth, thanks to economies of scale and favourable foreign exchange (FX) rates,” it said. The bank said Eco-Shop Marketing’s net margin should expand and stabilise at the nine per cent level in the FY2027-2028 forecast from 7.7% in FY2025, as the scale of operations would increase at a faster pace to capture market opportunities. “Investments in new distribution centres and favourable input costs on the back of a stronger

Binastra, Eco-Shop and Kelington among top companies for ESG investment: RHB IB

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