Saturday 13 Apr 2024
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KUALA LUMPUR (Nov 22): Hong Leong Investment Bank (HLIB) has maintained its "buy" rating on ITMAX System Bhd at RM1.74 with an unchanged target price (TP) of RM2.08, pegged to 25 times price-to-earnings (PE) multiple of its 2025 forecast (FY2025f) earnings following the group's latest financial results for the third quarter ended Sept 30, 2023 (3QFY2023). 

According to HLIB, the group’s earnings have matched its expectations, accounting for 75% of the research house's consensus and 73% of its full-year forecasts. 

The research house said it expects ITMAX to win more jobs in Johor over time to realise the integrated smart city system, as well as include other solutions such as networked lighting and smart parking in the future.  

Reviewing the company's financial results, HLIB said the provider of public space networked systems and communications network services reported its highest quarterly core net profit of RM16.31 million for 3QFY2023, with revenue of RM39.06 million.  

For the first nine months ended Sept 30, 2023 (9MFY2023), the group’s net profit surged to RM46.61 million (a 67.96% increase) while revenue jumped to RM107.09 million (a 49.75% increase).  

According to HLIB, the strong performance was driven by higher revenue from its supply, install and maintain services (SINMS), video surveillance and analytics services (VSAS) and trading segments, as well as higher net finance income and lower tax rate. 

In addition, the research house noted that the group's latest work in supply and installation works for its hospital contract had also contributed positively to the group's 3QFY2023 earnings. 

Moving ahead, HLIB Research believes that the group has a compelling outlook, given its multi-year growth potential on the back of solid order and tender books.  

As of end-September 2023, ITMAX System had an unbilled order book of RM870 million, which will be recognised progressively up to May 2039, while its tender book stood at about RM600 million. 

At the time of writing, shares for ITMAX were traded up three sen or 1.72% to RM1.77, valuing the group at RM1.79 billion.  

Edited BySurin Murugiah
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