Investment Highlights

• We maintain HOLD on Infomina with an unchanged fair valu of RM1.60/share after rolling forward our valuation to FY25 We pegged the stock to FY25F PE of 22x, in line with it closest industry peers' average. Our FV also reflects a unchanged neutral ESG rating of 3 stars.

• We lower FY24F earnings by 8% after factoring in a mor conservative sales estimates for the renewal segment as th group’s 9MFY24 results fell short of our expectation an market’s.

• 9MFY24 net profit of RM25mil accounted for only 65% of bot our and consensus FY24F earnings. The negative varianc was due to a slower recognition of orderbook for the renew segment.

• YoY, the group’s 9MFY24 revenue declined by 14% main due to the absence of one-off overage fee charges o overutilisation of the group’s services and lowe contribution from renewal segment (-25% YoY). Additionall gross margin from the renewal segment fell by 0.8%-point YoY. These has resulted in the Infomina’s net profit t decline by 21% YoY to RM25mil.

• QoQ, 3QFY24 revenue slipped by 15% to RM51mil, main due to lower contribution from both renewal (-14%) an turnkey (-17%) segments. We continue to see a slo recognition in the renewal segment as likely due to the ne contracts starting in FY25 and some turnkey projects ha delivered and recognised during 2QFY24.

• However, its net profit only declined slightly by 2% Qo thanks to better GPM by 22%-point to 38.7% for the turnke segment in Malaysia.

• Moving forward, Infomina continue to focus on Thailand an 2.6 3.2 Philippines to provide value-added application programmin interface (API) software to existing customers in the renew segment.

• Management is also targeting the Japanese market wit potential customers to switch to Infomina once the previou 500 renewal contract with another vendor ends. While th 450 company anticipates the Japan market to contribute to it 400 revenue towards end of FY24F, no guidance has been give so far.

• The stock currently trades at a fair FY25F P/E of 20x, clos 250 to industry peers' average of 22x.

Source: AmInvest Research - 19 Apr 2024