KUALA LUMPUR: ITMAX Systems Bhd’s shares rose 2.45% in early trade Friday on news that the company has secured a 15-year smart parking contract in Tangkak, Johor.
The counter added eight sen to RM3.35 with 655,900 shares traded at 10.30 am.
ITMAX announced that its subsidiary, Southmax Sdn Bhd, has been appointed by the Tangkak District Council (MDT) as the smart parking operator, managing 5,113 street parking bays that are currently gazetted by MDT in the Tangkak district.
ITMAX said the contract, effective from Sept 1, 2024, is for a duration of 15 years.
Similar to ITMAX’s other smart parking contracts, it will operate under a revenue-sharing model, with Southmax receiving 70% of the revenue generated from parking collections and parking compounds in the MDT area.
Hong Leong Investment Bank (HLIB) Research remains upbeat on ITMAX, and the latest contract reinforces its belief that this will elevate the company's earnings to the next level.
The research house’s back-of-the-envelope calculation assumes a 40% utilisation rate over 10 hours (8 am to 6 pm), which equates to four hours of use per day.
With parking operations running six days a week for 5,100 parking bays at RM0.60 per hour, this results in a monthly revenue of RM296,000, or approximately RM3.5mil per year.
“Based on the revenue sharing of 70%-30%, this would garner RM2.5mil per annum for ITMAX. With 50% margin assumption this could lift its bottom line by ~RM1.2mil per year.
“We understand that this award is only the first phase and there are more than 9,000 - 10,000 parking spaces to be gazetted,” HLIB said.
It said the revenue generated from the smart parking system will provide additional recurring income for the group.
To note, MDT is the third smart parking job win in Johor for ITMAX after securing Majlis Bandaraya Iskandar Puteri (MBIP) in June 2024 and Majlis Perbandaran Kulai (MPKu) in July 2024.
“We see significant opportunities for the group to expand this service to the other 14 councils. Assuming a total of 200,000 parking bays in the greater Johor area, with six days of parking operations at four hours per day (40% utilisation rate) and RM0.60 per hour, this would garner an average of RM11.5mil monthly or RM138.2mil per year.
“With the same term of 70%-30% revenue sharing and 50% margin, this could lift up the group bottom line by RM48mil per year,” it said.
The research house has maintained its “buy” call on ITMAX with a target price of RM4.71.
