KUALA LUMPUR (Sept 25): ITMAX System Bhd was heavily traded on Monday’s morning trade, prompted by its subsidiary securing a 15-year contract for the provision of video surveillance for the Johor Bahru City Council (MBJB) worth RM105.32 million.

At 12.30pm, ITMAX advanced 2.9% or five sen to RM1.80, the highest level ever recorded since its shares floated in the Main Market of Bursa Malaysia Securities in December 2022. ITMAX debuted at RM1.52, representing a 42.06% premium over the initial public offering price of RM1.07.

Its trading volume surged to 14.63 million, the second highest since its listing. ITMAX saw the highest volume of shares traded on Sept 22 — 18.98 million shares — four days after the announcement of the company clinching the video surveillance contract.

A pickup in the momentum of ITMAX has led Maybank Investment Bank (Maybank IB) to maintain its ‘buy’ call on the stock, and increase its target price (TP) to RM2.10 based on a higher 24.4 times financial year 2024 (FY2024) estimated price-to-earnings ratio (PER).

“We opine the higher premium is justified, underpinned by its niche position as one of select few domestic providers of AI-enabled CCTVs (closed-circuit televisions), and strong three-year (FY2022-2025) CNP (core net profit) CAGR (compound annual growth rate) of 33%, translating to a PEG (price/earnings-to-growth) of just 0.8 times at our TP,” said Maybank IB in a report on Monday.

Maybank IB is also positive on ITMAX’s contract spanning 15 years until September 2038, which will cover the provision of 500 CCTVs on a rental model as well as 34 traffic controllers to the district.

“We are optimistic on its prospects of securing CCTV letters of award (LOAs) for the remaining two town councils (Pasir Gudang [and] Kulai) in due course. There is also further scope for LOA awards in the remaining 12 Johor districts,” it added.

Complementing its CCTV rollout, its recent acquisition of smart parking outfit Aim-Force Software S/B could further synergise the suite of products offered to Johor town councils.

This includes the provision of parking fee collection services utilising AI-enabled CCTV number plate recognition.

Accounting for a potential expansion in the scope of work (beyond CCTV provision) ITMAX could potentially secure in Johor, Maybank IB raised its earnings estimates by 13% for FY2024 and FY2025.

“This is underpinned by our estimates of an increase in the number of CCTV units installed in Johor for FY2024/2025 and the provision of parking fee collection services,” said Maybank IB.

Similarly, Hong Leong Investment Bank (HLIB) reentered its ‘buy’ call on ITMAX with a higher TP of RM2.08 reflecting the upward earnings revision

“Our TP is derived from unchanged 25 times PE (price-earnings) multiple of FY2025 EPS (earnings per share) forecast (previously FY2024 EPS forecast). We believe that this homegrown smart city integrated system and solution provider is a compelling case given its multi-year growth potential on the back of solid order and tender books,” said HLIB.