Investment Highlights

• We maintain our HOLD recommendation on Infomina with the same fair value of RM1.51/ share, pegged to FY24F PE of 25x, in line with its closest industry peers' average forward. The FV also reflects an unchanged neutral ESG rating of 3 stars.

• Infomina has been appointed by the Companies Commission of Malaysia (CCM) as the service provider for an online platform over a 6-year tenure from 31 March 2023 to 30 March 2029.

• The platform will facilitate the public in searching, extracting and purchasing data on companies and businesses registered with CCM. Currently, there are 2 existing providers that provide similar services to CCM, which are SSM e-info and MyData-SSM.

• According to CCM’s data, total annual transactions provided by both services providers rose by a 3-year CAGR of 9.3% to 5.1mil in 2022 (exhibit 1).

• We positively view this contract which will provide a new recurring revenue stream for Infomina as it can charge a service fee based on the actual consumption of the platform for 6 years.

• The contract could potentially contribute up to 2% of Infomina’s earnings from FY23F to FY29F assuming that the company secures 25% of total transaction volume of 5.1mil and charge RM4 per purchase of company data. Currently, peers charge RM3 to RM5 per transaction depending on the type of documents.

• Pending further clarifications on the details of the contract from management, we maintain our earnings estimates for now given the slight potential impact.

• We gather from Infomina that it is targeting to obtain more contracts from local and overseas customers over the next 3 to 6 months.

• Infomina is set to release its 3QFY23 results on 13 April 2023. We expect the company to report stronger QoQ results for the quarter on the back of a more profitable sales mix and higher margins from its renewal segment.

• However, we view that the positive developments have been priced in with the stock currently trading at a premium FY24F PE of 27.5x, compared to Bursa Technology Index’s 5-year forward average of 26.8x.

• Key risks to our call and earnings forecasts are termination of contracts from major customers and a sharp dip in orderbook value.

Source: AmInvest Research - 6 Apr 2023