The Kogarah MP, Chris Minns, is likely to challenge Michael Daley for the leadership of the New South Wales Labor party, but first he needs to hang on to his multicultural seat in the wake of Daley’s damaging comments on Asian migration during the state election campaign.

“I am not going to rule anything in or out,” Minns told the Guardian. “We will have been in opposition for 12 years [at the end of this term] – that’s an eternity. We need to have a close look at ourselves, not just the leadership but also at our policies.”

On Sunday morning Minns was ahead 53.1% to 46.9%, two-party-preferred, with 75% of the vote counted.

The other possible leadership contender is the Strathfield MP, Jodi McKay. She has not returned calls.

Minns, 39, is regarded as a rising star of NSW Labor. He ran for the leadership against Daley in November after the former leader Luke Foley was forced to resign.

On Sunday Minns said his immediate focus was hanging on to his seat of Kogarah, which has a population of 30% Chinese-Australians and a further 10% with backgrounds from other Asian countries.

In the last week of the campaign a video emerged of Daley at a politics in the pub session at Wentworth Falls six months ago saying that “Asians with PhDs” were taking the jobs of “our kids”. He later sought to explain his comments as being about housing affordability, but agreed it was a bad choice of words and apologised.

Minns suffered a 4% swing against him, according to the latest figures. The Liberals fielded a 26-year old Chinese-Australian professional, Scott Yung, against him, and the swings were particularly savage in booths with majority Chinese-Australian populations.

Daley said on Sunday he intended to remain as leader, but in the wake of the poor result on Saturday night he will be under pressure.

“I think what you’ve got to keep in mind is I took the leadership four months ago, under difficult circumstances, and I had a very, very short time frame to establish myself, and I have worked as hard as I can,” he said.

“People know that. Yes, I’ve made some mistakes in the campaign. I am the best person to lead the party.”

Daley said he had “apologised unreservedly” for his comments about “Asians”, but Labor MPs with high proportions of Australians with Asian backgrounds in their electorates reported a serious backlash at the polls.

Labor suffered swings against its sitting members in Kogarah, Canterbury, Liverpool and Cabramatta, and the Liberals strengthened their margins in several outer Sydney seats such as Oatley.

“I have said from day one that it was a poor choice of words. It doesn’t reflect who I am. People who know me know that I am a progressive person. Those comments did let our communities down,” Daley said again on Sunday.

He said the result showed the electorate was “not engaged”.

“We have the same primary vote as the Liberal party. When the entire electorate moves away from all of the major parties, and sends their votes to minor parties and independents, I think you can conclude there is a great deal of cynicism, at least at the state level, with an electorate that’s disengaged,” he said.