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BusinessToday
27-05-2025
- Business
- BusinessToday
HLIB Maintains Hold On FGV
Hong Leong Investment Bank Bhd (HLIB) Research has maintained a HOLD call on FGV Holdings Bhd with an unchanged target price of RM1.26, following the group's move to acquire full ownership of eight subsidiaries from Koperasi Permodalan Felda Malaysia Bhd (KPF) for RM229.8 million. The house noted that while the earnings uplift from the acquisitions is likely to be limited—especially after accounting for funding costs—the move enhances FGV's operational control, improves decision-making agility and aligns better with its long-term strategic goals. HLIB has kept its earnings forecasts unchanged for now, pending further updates from FGV's upcoming results briefing scheduled for 28 May 2025. The acquisitions involve remaining minority stakes in key units including a 16.67% stake in FGV Kernel Products for RM12.9 million, a 33.33% stake in FGV Refineries for RM17.9 million, and a 49% stake in FGV Transport Services for RM77.9 million, among others. The transaction will be funded via a mix of internal funds and bank borrowings, and is expected to be completed by the third quarter of 2025. HLIB stated that based on FY2024 earnings, the acquisitions are not expected to contribute significantly to bottom-line growth. However, the analyst added that the initiative may support long-term gains by streamlining management efficiency across the group's downstream and support businesses. On the balance sheet, the impact is anticipated to be modest, with net gearing projected to rise slightly from 0.27 times as at 31 December 2024 to 0.31 times post-acquisition. At the current share price of RM1.28, FGV is trading at a slight premium to HLIB's target price, with a projected capital downside of 1.3%. The expected total return is marginal at 0.3%, supported by a 1.6% dividend yield. Despite recent share price gains, HLIB believes the stock remains fairly valued, given muted earnings visibility and potential margin pressures in its core plantation segment. The research house will revisit its outlook following the management's briefing later this month. Related
Business Times
06-05-2025
- Business
- Business Times
Malaysia's HI Mobility banks on Johor-Singapore boom to drive growth
[KUALA LUMPUR] Malaysian bus operator HI Mobility – a company that went public two months ago – is accelerating its push to get more people on buses, especially along the lucrative and often congested Malaysia-Singapore corridor. Chief executive officer Lim Chern Chuen views public transport as a crucial solution to issues in Malaysia, Singapore and other parts of South-east Asia: traffic gridlock, rising fuel costs, and the increasing need for affordable and sustainable mobility. Fresh off a RM116 million (S$35.3 million) initial public offering in March, the Johor-based bus operator is scaling up operations across Johor Bahru, Melaka, Klang Valley and Singapore as it capitalises on renewed commuter demand. For the financial year ending Jan 31, 2025, the company reported a 31 per cent jump in net profit to RM43.8 million, while revenue climbed 22 per cent to RM77.9 million. As of Monday (May 5), HI Mobility's market capitalisation stood at RM650 million, with its shares trading at RM1.30. 'Rising living costs, subsidy reforms and traffic congestion are driving more people toward public transport,' Lim told The Business Times in an interview at Kuala Lumpur. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up HI Mobility, through its wholly-owned subsidiary Handal Indah, currently manages a fleet of 638 buses across 124 routes in Malaysia and Singapore, and these numbers are set to grow. Betting big on cross-border traffic More than 300,000 people cross the Johor-Singapore Causeway daily, making it one of the busiest land crossings in the world. PHOTO: BT FILE Central to HI Mobility's growth strategy is its commanding presence on the Causeway, which is one of the world's busiest border crossings. The company operates 150 licensed buses that ferry thousands of commuters and tourists daily between Johor Bahru and Singapore. 'Volume has clearly picked up. On long weekends like Good Friday, we see traffic rise by at least 30 per cent compared to a normal day,' said Lim. 'The trend of individuals arriving in Johor a day before long weekends and extending their stay to explore various locations signals a shift in travel behaviour that favours mass transit.' In 2024, HI Mobility transported nearly 16 million passengers across the Causeway, contributing RM63.5 million to group revenue or 53 per cent of its total top line. That number is projected to climb to RM122.2 million in 2025, comprising nearly 60 per cent of revenue, according to the company's estimates. But Lim says the strategy isn't just about scale. HI Mobility is evolving into a mobility solutions provider – developing better connectivity, tourist-friendly routes, and last-mile links that tie into broader regional travel trends. 'There's a growing ecosystem in Johor built around tourist demand, such as medical and healthcare, leisure and entertainment, retail, and F&B. We want to make these places more accessible,' he said. The company is collaborating with local councils to improve traffic flow and add new pick-up and drop-off points. The upcoming Johor Bahru-Singapore RTS Link, due to open in 2026, will further reshape cross-border dynamics, he added. With an estimated 350,000 to 500,000 people crossing the border daily, HI Mobility sees opportunity in feeding passengers into and out of the RTS system. 'With congestion reduced by RTS, we can redeploy buses more efficiently and increase frequencies. It helps us serve even more destinations,' said Lim. Regional vision While Johor-Singapore remains its stronghold, HI Mobility is open to potential opportunities for new cross-border services, such as Thailand and Brunei. 'But the volume has to make sense,' Lim cautioned. 'What makes Johor-Singapore so compelling is the sheer scale of movement and business activity.' Still, once the company enters a new city or region, Lim said growth often comes organically through last-mile partnerships and B2B deals. Domestic expansion HI Mobility chief executive officer Lim Chern Chuen said: "Rising living costs, subsidy reforms and traffic congestion are driving more people toward public transport.' HI MOBILITY While the Johor-Singapore corridor remains HI Mobility's cash cow for now, the company is deepening its footprint in Malaysia through government partnerships. In April, it secured a RM134.9 million contract under a scheme to operate intra-city buses in Johor Bahru. The two-year deal, awarded by Malaysia's Land Public Transport Agency, will further entrench its operations in Johor Bahru. 'It's about improving reliability and cutting wait times,' said Lim. 'If people know the bus will arrive on time and offer a comfortable ride, they are more likely to use it regularly.' Beyond public contracts, HI Mobility is working with malls, business parks and local councils to design custom shuttle services to offer solutions in areas underserved by conventional routes. 'One of our biggest successes started as a private shuttle for Singaporean shoppers going to KSL Mall (in Johor Bahru),' Lim said, noting that the service has become so popular that it has been integrated into the main network. These B2B partnerships give HI Mobility faster rollouts and more flexibility than traditional route tenders. It also opens the door to broader mobility solutions, including charter services and corporate fleets, said Lim. HI Mobility is also eyeing adjacent business lines such as fleet maintenance, tech integration, and predictive analytics, especially as the take-up rate for electric vehicles (EVs) increases. Accelerating the EV shift Another major investment area for HI Mobility is fleet electrification. The company has placed orders for 55 new buses, including 10 EVs. While EVs require higher upfront investments, Lim said the long-term cost savings from lower fuel and maintenance expenses make them smart bets. 'The move is in line with Malaysia's sustainability goals. By starting early, it allows us to build expertise, lower infrastructure costs and future-proof our operations,' he said. Malaysia's National Energy Transition Roadmap sets ambitious targets for EV adoption in public transport, aiming for 15 per cent of total industry volume by 2030 and 80 per cent by 2050. 'It's no longer just about driving a bus. You need to manage charging times, forecast electricity rates and automate maintenance,' said Lim. To further enhance operational efficiency and ensure sustainable operations, the company's internal tech division is prioritising data integration, real-time monitoring, and operational optimisation. These tools, he added, may be packaged and offered to other operators, positioning HI Mobility not only as a transit provider but as a mobility tech firm too. 'Public transport is no longer a backup plan. It's becoming the backbone of modern cities, and we want to be at the heart of that transformation,' said Lim.
