Future Plans for Growth:

  • Expansion of vehicle fleet and depot facilities.

The group plans to expand its vehicle fleet and depot facilities, whereby the group has confirmed orders for the purchase of 115 buses which include 10 electric buses and 105 ICE buses, which is estimated to be delivered progressively by March 2025. The group will also allocate RM70.0m (60.4% of IPO proceeds) for fleet expansion, whereby types and number of buses to be procured are subject to the group securing contracts by way of tenders within 24 months from the date of Listing. The group is actively tendering for contracts for the operation of intracity and chartered bus services.

  • Enhance its depot facilities.

The group also intends to enhance its depot facilities by establishing additional DC charging stations to accommodate the growth of its electric bus fleet. RM15.0m (12.9% of IPO proceeds) will be allocated for setting up additional charging stations. The number of charging stations to be set up is dependent on the number of electric buses that will be procured within 24 months from the date of Listing.

  • Expand its digital infrastructure.

On top of that, the group plans to expand its digital infrastructure, including installing and integrating a "tap-and-go" contactless ticketing system and upgrading its OCC with a data integration platform. These advancements will enable the group to monitor and manage its buses in real time and conduct data analytics. The group also plan to expand its digital infrastructure to optimise fleet management through the use of artificial intelligence. The estimated investment cost is RM5.0m, which will be funded through IPO proceeds.

  • Expand its geographical presence.

The group also plans to expand its geographical presence. This includes securing new routes within the states and federal territories where they currently operate, as well as exploring opportunities in other states to diversify their market and drive business growth.

M+ Fair Value

We assign a fair value of RM1.57 per share for HI Mobility Berhad, representing an 28.7% upside from the IPO price of RM1.22. This valuation is based on a P/E ratio of 15.0x, pegged to mid-FY27f EPS of 10.49 sen. Despite the 12-months average forward P/E and historical average P/E for its peers stood at 10.3-11.6x, we believe that the ascribed P/E is fair as HI Mobility operates predominantly in Johor, securing government contracts like SBST and ‘Bas Muafakat Johor’ for intracity services while also maintaining a strong presence in Johor-Singapore cross-border transportation. This strategic positioning provides the group with an added advantage, particularly with the anticipated boost from the JSSEZ initiative.

 

Meanwhile, its recent commencement of the BAS.MY services (Melaka) in May 2024 and contract win with Rapid KL (Klang Valley) in June 2024 marks a key milestone in its expansion into other states, which we believe will unlock further growth opportunities. It is also important to note that HI Mobility’s peers have a negative average ROE and NP margin, unlike the group, which is demonstrating a double-digit ROE and NP margin.