CIMB Securities has maintained its BUY call on HI Mobility with a RM2.80 target price, saying the recent 21% share price pullback offers an attractive entry point ahead of several potential contract catalysts, including an expanded Johor Stage Bus Service Transformation (SBST) programme.
The research house believes the expanded Johor SBST contract could be worth two to three times HI Mobility’s existing RM282.5 million five-year contract, with the programme potentially covering feeder and dispersal routes for the Johor-Singapore Rapid Transit System (RTS) Link and nearly 300 buses.
CIMB said the larger programme could also feature a higher proportion of electric buses, which could lower direct operating costs by up to 70% through reduced fuel, maintenance and repair expenses.
The delay in awarding the RTS dispersal bus contract is not expected to have a material near-term earnings impact as CIMB’s forecasts do not yet include contributions from the routes. It expects earnings to strengthen in 2HFY27F, supported by resilient cross-border travel demand and contributions from HI Mobility’s commercial vehicle assembly and distribution business.
The company has also indicated plans to participate in Prasarana’s upcoming tender for up to 1,200 electric buses under Phase 2A and Phase 2B.
CIMB expects potential catalysts to include the expanded Johor SBST award, Prasarana contracts, stronger cross-border traffic and higher dividend payouts, while risks include further contract delays, weaker cross-border demand and labour shortages.
As of 11.13 am, the stock price dropped 1.10% to RM1.80.
