KUALA LUMPUR (Nov 14): HI Mobility Bhd (KL:HI) is venturing into commercial vehicle manufacturing and assembly with its proposed acquisition of Acacia Motor Services Sdn Bhd and Handal BCM Sdn Bhd for RM82.52 million through an all-shares deal.

In a filing with Bursa Malaysia on Friday, the company said it has signed conditional share sale agreements to acquire both entities, which are linked to its founder and controlling shareholder Lim Han Weng and his spouse Bah Kim Lian, via the issuance of 34.39 million new shares of HI Mobility at RM2.40 apiece.

Lim is the founder of HI Mobility and Yinson Holdings Bhd (KL:YINSON). He is also the father of Lim Chern Chuen, who is the executive director cum chief executive officer of HI Mobility.

HI Mobility said the valuations for Acacia Motor Services and Handal BCM imply price-earnings multiples of seven times, based on their latest audited profit after tax. The acquisitions value Handal BCM at RM52.90 million and Acacia Motor Services at RM29.63 million, and will be settled through the issuance of 22.04 million and 12.34 million new shares respectively.

Following completion of the exercise, the group’s share base will expand by 6.88% to 534.39 million shares from 500 million, resulting in a 6.4% dilution for existing shareholders.

Acacia Motor Services is owned by Han Weng and Bah with stakes of 70% and 30%, respectively. Meanwhile, Handal BCM is held by Handal Ventures Sdn Bhd (55%) — the investment vehicle of Han Weng and Bah — and Liberal Option Sdn Bhd (45%), which is jointly owned by Datuk Choo Keng Kit (60%) and Tan Say Tuan (40%).

Both Acacia Motor Services and Handal BCM will become wholly-owned subsidiaries of HI Mobility following the acquisition. The group also plans to diversify into manufacturing, assembly, distribution, maintenance and repair of commercial motor vehicles — a move requiring shareholder approval as the new segment is expected to contribute at least 25% of group net profit.

“These acquisitions mark our evolution from a service operator to a more integrated commercial vehicle industry player. By integrating Handal BCM and Acacia, we aim to strengthen our core bus operations, realise meaningful synergies, improve efficiency and establish a streamlined transportation value chain that positions us for sustainable long-term growth,” Chern Chuen said.

He added that the group sees promising opportunities in the electric vehicle (EV) sector, noting that RM1.9 billion has been allocated to a government-owned public transport company to procure about 1,660 buses, including 1,350 electric units.

“We maintain cautious optimism that the consolidation of Handal BCM and Acacia will deliver synergistic advantages, enabling HI Mobility to achieve economies of scale across procurement, logistics and production, while reducing overheads through streamlined functions. The overall impact is expected to be earnings-accretive and enhance shareholder value.”

HI Mobility said the acquisitions are intended to strengthen its competitiveness in upcoming tenders for electric and diesel buses, which require integrated supply, operations and maintenance capabilities. Acacia Motor Services’ assembly operations and Handal BCM’s distribution network are expected to deliver operational and financial synergies.

The company projects pro forma net profit to rise to RM55 million, with earnings per share increasing to 10.29 sen.

Acacia Motor Services is principally engaged in the manufacturing, assembly, distribution, maintenance and repair of EV and internal combustion engine (ICE) buses, while Handal BCM specialises in the importing, distribution and sales of motor vehicles.

Together with HI Mobility’s expertise in fleet management and workshop facilities, the acquisitions are expected to enhance vehicle marketability, create opportunities for integrated service offerings and unlock new revenue streams.

Several directors and major shareholders, including Han Weng and Bah, are deemed interested parties and will abstain from voting on the proposals. The group expects the acquisitions to be completed by the first quarter of next year.

HI Mobility’s shares closed unchanged at RM2.40 on Friday, valuing the group at RM1.2 billion. The stock has nearly doubled from its listing price of RM1.22 on March 28.