Mi Technovation's S$104mil Singapore hub to anchor next phase of AI, EV powertrain growth

KUALA LUMPUR: Mi Technovation Bhd's (MiTB) proposed S$103.9 million (RM331.8 million) acquisition of a seven-storey industrial building in Singapore is a strategic move to support the commercialisation of its intelligent electric powertrain systems and autonomous driving platforms.

Public Investment Bank (PublicInvest) views the acquisition of KHL building through its wholly owned subsidiary, Ohima International Pte Ltd, as a long-term strategic investment rather than a conventional property purchase.

It said the facility would serve as a global operational hub for MiTB's Vehicle Technologies Business Unit (VTBU), positioning the company to capitalise on anticipated demand for its next-generation mobility technologies.

Currently, there is a potential order pipeline of more than 181 powertrain units, with an average selling price (ASP) of US$40,000 per unit, alongside ongoing discussions for another 5,000 to 10,000 units, PublicInvest said in a note.

Management is targeting deliveries of 45 to 55 powertrain systems this year, with 27 units already secured year-to-date, PublicInvest said.

"VTBU is tipped to be the group's key growth driver over the next five years, and we expect significant sales orders starting next year," it said.

PublicInvest maintained its "Outperform" call on MiTB, with a sum-of-parts-based target price of RM9.45.

The proposed acquisition will provide about 10,348 sq m of gross floor area, substantially expanding the company's Singapore headquarters, which currently operates from leased premises in Queenstown with a built-up area of about 568 sq m.

VTBU also operates manufacturing and research and development (R&D) facilities in Hangzhou, Xi'an and Chongqing, China, with a combined built-up area of approximately 10,809 sq m.

The new Singapore facility will house several strategic functions, including the company's main data and computing centre, digital twin and artificial intelligence (AI) centre, product definition and strategy centre, global finance and legal centre, as well as customer experience facilities.

PublicInvest said consolidating these functions could strengthen coordination across product development, customer engagement, commercial operations and global support activities.

It added that Singapore was selected for its established position in shaping global autonomous driving standards and supportive government policies.

The acquisition will be financed through a combination of bank borrowings (74.5 per cent), proceeds from the listing of Mi Material Holding Ltd on the Singapore Exchange (24.5 per cent) and internally generated funds (1.0 per cent).

MiTB estimates incidental acquisition costs at about S$5.31 million (RM16.96 million), covering stamp duty, legal and technical due diligence expenses. These costs will be funded using proceeds from the Mi Material listing.

However, renovation and fit-out expenses have yet to be determined, pending detailed planning and cost assessments.

PublicInvest said the overall capital commitment would therefore exceed the headline purchase price after accounting for transaction expenses, applicable goods and services tax and renovation costs.

Based on MiTB's pro forma financial information, the acquisition is expected to increase the company's gearing ratio from 0.04 times to about 0.21 times, assuming bank borrowings of about RM247.2 million.