FOMINA: Stable Core Earnings Reaffirm Resilience, Significant Order Book Growth Expected
| Key Investment Details | |
|---|---|
| Investment Bank | AmInvestment Bank |
| TP (Target Price) | RM1.70 (+14.1%) |
| Last Traded | RM1.49 |
| Recommendation | |
Performance Review
AmInvestment Bank has maintained its “BUY” recommendation on the technology firm, citing stable first-quarter FY26 earnings and a robust future outlook driven by significant contract renewals and strategic expansion into Japan. The investment bank has kept its target price unchanged at RM1.70 per share, implying a 14.1% upside from the last traded price of RM1.49.
For the first quarter of FY26, the company reported stable core earnings of RM8 million, aligning with both AmInvestment Bank’s and consensus estimates (23% and 22% of estimates, respectively). Despite an 18% year-on-year increase in revenue, core earnings saw a 5% year-on-year dip. This was primarily attributed to higher staff costs associated with its strategic expansion initiatives in Japan, which impacted profit margins.
Future Outlook and Growth Catalysts
Looking ahead, the firm is poised for substantial growth, with major contract renewals anticipated from the third quarter of FY26 onwards. These renewals are expected to significantly bolster the company’s order book, potentially doubling it to RM600 million by the end of FY26. AmInvestment Bank projects a record 32% year-on-year earnings growth for FY27F, supported by these renewals and its expanding presence in Japan.
The Japan operations, which contributed 3% to revenues in 1QFY26, are forecast to grow their contribution to 8% in FY26F and 14% in FY27F as new customer wins scale up.
Additionally, the company’s venture into Artificial Intelligence and data analytics is viewed as an incubator for emerging startups, offering longer-term optionality. While this segment’s potential contributions have not yet been factored into AmInvestment Bank’s forecasts, it represents an exciting future growth avenue.
Valuation and Recommendation
AmInvestment Bank’s maintained “BUY” rating is based on a target Price-to-Earnings (PE) ratio of 24x applied to its FY27F EPS of 7.1 sen. This valuation is in line with the group’s 5-year average PE. The investment bank believes that expectations of record FY27F earnings and the upside optionalities from the AI venture will help re-rate valuations back to their mean, reinforcing the “BUY” recommendation.
