KUALA LUMPUR (March 20): ITMAX System Bhd’s (KL:ITMAX) latest contract win provides a foothold for the company to tap into a massive market for surveillance cameras in Penang, said Hong Leong Investment Bank.

Penang Island alone would require about 10,000 closed-circuit televisions (CCTV) for full coverage, making it a significant growth opportunity for ITMAX, said the research house in a note. Penang is still in the early stage of its smart city transformation, the house said.

“We are confident ITMAX is well-positioned to secure the remaining CCTV contracts as they are rolled out in the coming years,” it said.

On Wednesday, the company announced that it has secured its third contract in Penang, this time valued at RM26.6 million from Seberang Perai City Council. The contract, involving deployment and maintenance of a network of CCTVs, will commence on April 15, 2025, and run until Oct 14, 2034.

The latest contract follows an award in January 2025 for upgrading and maintenance services of a select CCTV system in Penang island and its first contract in August 2024 for the installation of 48 CCTVs along with an integrated operations centre.

The share price of ITMAX have been swinging between gains and losses, tracking broader market volatility, and is up barely 3% year-to-date. Hong Leong, which has the highest target price of RM5.17 for ITMAX, kept the stock on ‘buy’ based on 45 times its forward earnings.

UOB Kay Hian and Maybank Investment Bank, the only two other research houses covering ITMAX, also have the stock on ‘buy’ calls. The average target price is RM4.67, according to Bloomberg, indicating potential upside of up to 23% from its last price of RM3.81.

ITMAX deserves the premium valuation as the company has “unique direct exposure” to the artificial intelligence theme, especially at the application level, Hong Leong said.

“We believe that this homegrown smart city integrated system and solution provider is a compelling investment case, given its multi-year growth potential on the back of solid order and tender books,” the house added.

Excluding the latest job, ITMAX has an unbilled order book of more than RM1.43 billion which will be recognised progressively until May 2039. The company is bidding for jobs worth more than RM600 million at the end of 2024.

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