• Retain HOLD on Infomina with a lower FV of RM1.39/share (from RM1.60/share). This follows a cut in our earnings estimates, partially offset by rolling forward our valuation base year to FY26 (from FY25). Our target PE is unchanged at 20x.
• We cut FY25F/FY26F/FY27F earnings by 24% due to slower than anticipated progress in securing new projects. Outstanding order book (as at end-Aug 2024) fell 10% QoQ to RM393mil (34% is guided to be recognized in FY25). More a timing issue, we believe, the pipeline remains healthy, with tender book at RM860mil (+26% YoY).
• 1QFY25 earnings of RM8mil (+10% YoY) came in below expectations, forming 17% of ours and consensus estimates. The shortfall was due to weaker than expected turnkey (-63% YoY) and renewal (+2% YoY) revenues.
• Something to monitor ahead is trade receivables, which rose 28% QoQ to RM141mil. The rise was attributed to delayed payments from government contracts, which represents 30% of 1QFY25 revenues. This resulted in negative operating cash flows of RM21mil during the quarter.
• Potentially developing into a third income stream, the group is working on new artificial intelligence (AI) powered solutions. This is to provide enhanced data access and analysis to businesses and financial institutions. By collaborating with strategic partners, via Memorandum of Understandings (MoU), the group aims to streamline corporate information access for small and medium sized enterprises in Malaysia through SSM (companies commission of Malaysia) search. We have not factored this into our estimates.

Source: AmInvest Research - 17 Oct 2024