INFOM: Strategic Expansion and Robust Order Book Fuel Future Prospects
| Investment Bank | AmInvestment Bank |
|---|---|
| TP (Target Price) | RM1.80 (+30%) |
| Last Traded | RM1.38 |
| Recommendation |
AmInvestment Bank has maintained its “BUY” recommendation for the company, citing a strengthening outlook driven by a significant surge in its order book and expanding presence in Japan. The investment bank has also reiterated a target price of RM1.80 per share, implying a 30% upside from the last traded price of RM1.38.
Performance Highlights
For the first half of the current financial year, core profit of RM16 million was broadly in line with expectations, reflecting a flat performance year-on-year. However, the second quarter of the financial year (2Q26) demonstrated robust operational momentum, with revenue increasing by 15.2% quarter-on-quarter (QoQ) and core Patami growing by 5.2% QoQ. While operational margins for the quarter were noted to be lower due to the immediate expensing of Japan-related costs rather than prior capitalisation, this is viewed as a strategic investment for future growth.
Strategic Growth Drivers
The company’s growth trajectory is underpinned by two key pillars: enhanced earnings visibility and a new growth engine in Japan.
The order book nearly doubled, soaring 91% QoQ to a record RM555 million. This substantial increase, backed by significant contract wins including RM137 million from Siam Commercial Bank and Metropolitan Bank & Trust Company each, alongside RM66 million from KDN, provides a solid runway for future earnings delivery and materially improves visibility. The tender book also includes RM54 million tied to its AI business, which, despite being relatively small, could contribute meaningfully to profits due to its higher margin profile.
Concurrently, Japan is transitioning from an “option” to a significant “driver” of revenue. Japan-derived revenue doubled QoQ to RM4 million, with expectations for its contribution to scale to 8% of FY26F and 14% of FY27F revenues, representing an annual revenue opportunity of RM80 million.
Financial Strength and Outlook
The company maintains a strong balance sheet, supported by a net cash position of RM96 million, which also provides flexibility for potential merger and acquisition opportunities. The group recently declared a 1.35 sen dividend, implying an annualised ~2% dividend yield if maintained on a half-yearly basis. Valuation remains attractive, with the stock trading at an approximate 20% discount to its five-year average.
Analyst Recommendation
AmInvestment Bank’s reiterated “BUY” recommendation is anchored to a 24x target price-to-earnings (PE) ratio applied to CY27 EPS. The firm highlights the improving demand visibility and increasing exposure to the lucrative Japanese market as key factors supporting its positive outlook and the attractive valuation.
