PETALING JAYA: ITMax System Bhd
is on a healthy expansion mode with strong chances to secure several major contracts to boost its earnings, according to Hong Leong Investment Bank (HLIB) Research.
The public space network system services provider is likely to secure the supply, installation and maintenance services contracts (SINMS) at four municipal councils in Johor, citing comments from ITMAX’s management.
The brokerage said securing the contracts would put ITMAX in a good position to win subsequent projects in other councils in the southern state of Malaysia.
Bullish on ITMAX’s growth prospects, HLIB Research reiterated its “buy” on the company, with an unchanged target price of RM1.80 a share, pegged to 25 times the estimated price-earnings for the financial year ending Dec 31, 2024.
“We believe this home-grown 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,” HLIB Research said in its report following a recent meeting.The brokerage pointed out that in the near term, ITMAX’s management appeared confident of winning the SINMS contracts, which included the installation of 1,600 closed-circuit television (CCTV) cameras at four municipal councils in Johor, namely Johor Baru, Pasir Gudang, Iskandar Puteri and Kulai.
It noted 500 smart CCTVs would be installed at each council area, with the exception of Kulai where it would start with 100 CCTVs.
There would also be a command centre set up for each local council and the installation of 1,600 across the four local councils would start simultaneously and targeted to be complete by year-end, HLIB Research said.
“In the event that ITMAX managed to secure the contracts at the four councils, the group will also be the front runner to bag subsequent projects from the other 12 councils in Johor,” it said.
“We understand that the subsidiary, Southmax Group, will take the entire related project in the southern region of Malaysia,” it added.
In another development, HLIB Research said ITMAX’s project in Sabah was still in the negotiation stage, with progress right on track.
It said ITMAX was also looking to continue its growth by expanding its service offerings and into other geographical territories and segments.
“The group is venturing into new market segments in residential township development projects and commercial development projects, including malls and office towers, hospitals, healthcare facilities and highways,” HLIB Research said.
Apart from that the business expansion also includes setting up a data lake facility in the Klang Valley which is aligned with the Malaysia MyDigital initiatives, it added.
Overall, ITMAX was cautiously optimistic its future prospects remained favourable, HLIB Research noted.
As of end-March 2023, ITMAX had a total unbilled order book of RM601mil, comprising video surveillance and analytics services (80%), SINMS (18%) and telecommunications and network infrastructure services (2%).
The remaining portion of its order book will be recognised progressively up to March 2032, HLIB Research noted.
