Deal-making likely to rise

PETALING JAYA: The corporate landscape could see a wave of value-accretive deals in 2026, with mergers and acquisitions (M&A), privatisations, initial public offerings (IPOs) and capital management exercises expected to gain momentum after a series of transactions announced over the past year.

UOB Kay Hian (UOBKH) Research said market conditions remain supportive for such activities, underpinned by steady economic growth and a relatively benign interest-rate environment.

These factors are helping to strengthen corporate earnings and cash flow, creating room for companies to unlock value through strategic exercises.

The research house noted that “2026 remains conducive for value-accretive corporate exercises,” citing privatisations, asset monetisation, capital management and acquisitions as key themes to watch.

At the same time, a head of research with a foreign brokerage told StarBiz that the expected rise in corporate exercises this year reflects a maturing phase of the Malaysian equity market, rather than just a short-term trading theme.

“After several years of subdued valuations, many listed companies now have stronger balance sheets, stable cash flows and limited organic expansion opportunities, making capital recycling, privatisations and asset spin-offs logical next steps.

“The current interest-rate environment also remains supportive of deal financing,” he said. Notably, the research head pointed out that there could be a likely concentration of activity in the mid-cap space.

He said this segment has underperformed for years, and meaningful corporate actions could act as a catalyst to re-rate quality names that have been overlooked.

“However, not all deals will create value. Investors will need to distinguish between genuine strategic restructuring and exercises aimed merely at financial engineering or short-term share price support,” he added.

According to UOBKH Research, meanwhile, companies with depressed valuations and strong cash flows are especially likely to consider such moves, including those in the oil and gas and property and real estate investment trust (REIT) sectors.

It said many of these transactions are likely to occur within the mid-cap segment, which could help revive investor interest beyond the large-cap space.

“Our channel checks suggest that many more value-accretive corporate exercises, such as M&A, privatisation, IPOs and asset monetisation, as well as capital management, could materialise in 2026,” the research house said, adding that the activity would follow “the heels of the first mega deal of Sunway Bhd’s proposed acquisition of IJM Corp Bhd”.

In the M&A space, IJM Corp remains a key beneficiary, with its share price trading below Sunway’s takeover offer. Historically, such transactions tend to provide immediate upside for acquisition targets, although the acquiring company’s share price could also gain depending on valuations and synergy prospects.

On the privatisation front, UOBKH Research highlighted GuocoLand (Malaysia) Bhd, where the controlling shareholder has proposed a take-private exercise at a premium.

It also expects Yinson Holdings Bhd to undertake a long-awaited corporate exercise involving the privatisation of its floating production, storage and offloading fleet.

Asset monetisation and listings are another major theme. Zetrix AI Bhd could spin off its blockchain division via a US-listed special-purpose acquisition company, with a potential valuation of US$1bil to US$2bil.

Meanwhile, Magnum Bhd could unlock value through the long-anticipated listing of U-Mobile Sdn Bhd, in which it owns a 6.3% stake.

Property players such as IOI Properties Group Bhd and S P Setia Bhd could monetise assets through REIT listings, with their Malaysian portfolios potentially accounting for more than half of their respective market capitalisations.

On capital management, companies with strong balance sheets and cash flow generation may opt for special dividends. Hume Cement Industries Bhd was singled out as a key beneficiary after monetising idle assets, giving it the capacity to enhance shareholder returns.

Overall, UOBKH Research said the expected wave of deals could act as a catalyst for the broader market, particularly in the mid-cap segment.

It said such exercises could help generate alpha, or in other words, outperform the general market, and unlock shareholder value across the market.