WHEN Hi Mobility Bhd went public, the Lim family, led by tycoon Lim Han Weng, offered investors exposure to a fast-growing bus operations business.
That has paid off, with the stock trading at RM2.23 at press time, up from its initial public offering (IPO) price of RM1.22. It had also hit a high of RM2.88 at one point.
Now, one year on, the group is stepping up.
Expanding beyond operations
Hi Mobility recently secured shareholder approval to inject Acacia Motor Services Sdn Bhd and Handal BCM Sdn Bhd – both majority-owned by Han Weng – in an RM82.52mil all-shares deal, set to complete once all conditions are satisfied. This will see Hi Mobility move beyond bus operations into the full commercial vehicle value chain.
The exercise will involve issuing 34.39 million new shares at RM2.40 each, expanding its share base by 6.88% to 534.39 million.
Acacia, 70%-owned by Han Weng and 30% by his spouse Bah Kim Lian, assembles, distributes, retails and handles after sales services for buses from Chinese marques like Foton, Golden Dragon and Yutong.
Handal BCM, held 55% by the couple’s investment vehicle Handal Ventures and 45% by Liberal Option Sdn Bhd, imports, distributes, retails and provides after-sales service for light trucks and passenger vans, including Foton, Kaicene and Golden Dragon.
Hi Mobility non-independent executive director-cum-chief executive officer Lim Chern Chuen says the acquisitions will not only create synergies across the group, but also position Hi Mobility to meet the government’s increasing preference for integrated mobility solutions.
“At the time of listing, our operations business was performing well. But soon after, we saw procurement trends changing – towards electric vehicles (EVs) and integrated services. To compete, even assemblers and distributors need these capabilities,” says the eldest son of Han Weng.
“Even though it’s an all-share deal, there is dilution. But in the bigger scheme of things, we think that it adds to shareholder value.”
The move also positions the group to tap into upcoming contracts.
Last year, the Finance Ministry allocated RM1.9bil to Prasarana Malaysia Bhd to procure 1,660 buses over three years, including 1,350 electric units.
Chern Chuen says bringing these businesses in-house will allow Hi Mobility to capture more value across the chain while improving cost efficiency and passing savings on to customers.
“This is the right time to realise synergies and allow shareholders to tap into growth in the sector. Specifically, for commercial vehicles, we are moving into the whole value chain.”
In a circular to its shareholder, Hi Mobility said the acquisitions are expected to lift earnings by about 25%, with pro forma net profit rising to RM55mil from RM43.76mil for the financial year ended Jan 31, 2025 (FY25), assuming the deal took effect on Feb 1, 2024.
Both target companies have higher gearing – Acacia at four times and Handal BCM at one times.
Chern Chuen says this is because both companies had incurred capital expenditure in the last couple of years.
“But all that is given the growth outlook in the next few years.”
Still, Hi Mobility’s overall gearing will rise only slightly, from 0.71 to 0.73 times post-acquisitions, keeping the balance sheet relatively stable.
Chern Chuen points out that Acacia, though relatively new, is already seeing strong demand, with an order book of 298 buses scheduled for delivery by the third quarter of 2026.
It is also expanding its assembly capacity from 20 to 50 units per month to meet the demand.
He adds that Handal BCM, which serves mainly private-sector customers, operates under a different sales model that is less contract-driven.
Chern Chuen says demand for commercial vehicles has been supported by a growing shift towards competitively priced Chinese marques.
“In the past, adoption was slower, but in recent years, the value proposition has improved significantly,” he says, estimating that Handal BCM accounts for about 20% of the light commercial vehicle segment.
For buses, the market is more fragmented across segments such as city, long-distance and tourism, although he notes that Acacia is among the leading players by volume in the city bus segment.
Hi Mobility, historically, has seen its profit margins hovering at about 16% over the past years.
While margins may narrow as the group expands into lower-margin segments, Chern Chuen says the focus is on long-term growth.
“As we move into a larger ecosystem, some margin compression is inevitable. But it also opens up more opportunities and diversifies our customer base.”
The group has been paying a dividend of one sen per share quarterly and aims to sustain this for now, even as it prioritises growth.
Post-acquisition, its workforce is expected to increase from about 1,400 by another 100 to 200 employees, with no immediate plans for job cuts.
“We are seeing strong growth ahead, so the focus is on better utilising resources rather than reducing headcount.”
For the near term, management’s priority is integrating the new businesses and realising synergies, although further acquisitions are not ruled out.
“The industry is transforming. We need to evolve along with it to create value for stakeholders,” he says.
“Our vision remains clear: To provide sustainable transportation.”
Fleet growth and expansion plans
Hi Mobility’s fleet has grown to nearly 800 buses, from just over 600 at the time of its listing a year ago.
Chern Chuen says this reflects steady contract wins, as fleet expansion is typically tied to secured projects.
He notes that much of the recent growth has been driven by projects in Johor, particularly under gross cost contracts, where operators are paid a fixed fee while the government retains fare revenue.
“We are also seeing some growth in cross-border services,” he says.
To support expansion, the group is looking to increase its depot capacity.
Chern Chuen says its existing facilities in Johor can accommodate about 100 additional buses, but demand is expected to require space for up to 200 more units.
“As demand grows, we are exploring opportunities to expand, including potentially new sites in Johor,” he says.
In the Klang Valley, the group is also studying the possibility of setting up a base, leveraging the capabilities of its newly acquired businesses.
“Acacia already has sites in Kuala Lumpur, so instead of starting from scratch, we can combine resources and improve utilisation.”
Betting on electrification
Beyond fleet expansion, the group is also positioning itself for the industry’s longer-term shift towards electrification.
Chern Chuen says the transition to EVs is both a cost and growth opportunity for the group.
“Transportation is one of the largest contributors to emissions globally, so the shift towards EVs is inevitable.”
While EVs come with higher upfront costs, Chern Chuen says they offer lower operating expenses, particularly in fuel and maintenance.
“In terms of energy versus fuel, savings can be up to 50%, while maintenance costs are also significantly lower due to fewer moving parts,” he explains.
Over a typical 15-year bus lifespan, he says the total cost of ownership between EVs and internal combustion engine vehicles is approaching parity, even when factoring in battery replacement.
“We believe the cost curve is moving in our favour as battery prices continue to decline.”
The group is also an authorised service dealer for CATL, positioning it within the EV ecosystem.
The shift, however, requires significant investment in infrastructure, including depot-based charging systems, substations and supporting equipment.
“In Malaysia, depot charging still makes the most sense for now,” he says, adding that the next phase could involve opportunistic charging outside depots to improve efficiency.
Beyond hardware, the group is looking to monetise its in-house systems and operational expertise, including fleet management tools, payment systems and telematics, by offering them to third-party operators.
“As fleets grow larger, these systems move from being optional to essential.”
The group is already supporting operators in Sabah and Sarawak and sees further opportunities to bundle such services alongside vehicle sales, particularly with the rise of EVs.
Cross-border demand and RTS impact
Cross-border services, primarily under its Causeway Link brand, currently account for about 40% to 50% of Hi Mobility’s business, with the remainder coming from domestic routes.
While developments such as the Johor-Singapore Rapid Transit System (RTS) may affect cross-border bus services, Chern Chuen sees a silver lining.
He says the RTS is positive for the sector, as it could ease congestion and improve overall traffic flow.
“With less congestion, buses can run more efficiently and increase trip frequency.”
He notes that improved rail connectivity is expected to boost first- and last-mile demand for bus services.
The group currently carries more than 60,000 passengers daily but sees room for growth, particularly during peak hours.
“At the moment, peak-hour ridership only makes up about 10% of total volume, largely due to congestion constraints,” he says, adding that the group is targeting a rise to 40% with improved traffic conditions.