PETALING JAYA: ITMax System Bhd
is well-positioned to chart strong earnings growth for this year and over the next few years, underpinned by several growth drivers.
UOB Kay Hian (UOBKH) Research said while ITMAX recorded a stellar three-year net profit compounded annual growth rate (CAGR) of 70% from 2021 to 2023, it expects the growth to remain supercharged in 2024 and beyond.
“We are forecasting a three-year net profit CAGR of 24%, mainly driven by resilient earnings visibility from its existing order book on hand, further penetration and deepening presence into other states, expansion of network and telecommunications infrastructure which aligns with MyDigital initiatives and securing tenders in new target segments within the private space.
“Our assumptions have also yet to factor in the group’s potential in securing more contracts, collaborations with JLand Group and more sign-ups for the group’s smart parking systems,” It said.
As of June this year, ITMAX had a strong order book with a contract value of RM1.58bil and an unbilled order book of RM1bil through to 2039 on hand.
Based on its assessments, the research house said these order books were sufficient to cater for earnings growth in the coming years.
This is given that the group’s business model commands project-based revenue and monthly recurring revenue which are derived on a progress billing basis.
More importantly, UOBKH Research said the group continues to prove its relevance by further securing three contracts year-to-date valued at RM230mil, besides being appointed to operate in two other smart city-related projects.
ITMAX is a provider of public space network systems, focused on lighting, video surveillance and traffic management, as well as communications network services.
The group is involved in some of Kuala Lumpur’s smart city initiatives.
In September last year, ITMAX’s 65%-owned subsidiary Southmax secured a 15-year RM105.3mil subscription services contract from MBJB or the Johor Baru City Council.
This marked the group’s initial foray into a new geographical market (out of Kuala Lumpur) to provide video surveillance services.
Subsequently, the company further secured three contracts from the Iskandar Puteri, Pasir Gudang and Kulai city councils, bringing the total order book secured in Johor to RM373.2mil.
The brokerage, which is maintaining its “buy” call on the stock with a new target price of RM2.91, said it understands that ITMAX’s smart city solutions is a state-wide adoption.
It noted that there are a total of 16 local councils within Johor, hence leaving plenty of growth opportunities for the group to capture.
