• Infomina Berhad (Infomina) is a technology firm primarily  engaged in the design and implementation of technology  applications and infrastructure solutions specializes in mainframe  technology that supporting the fundamental business operations  of its clients.

• Infomina key growth drivers include: i) ability to leverage its  extensive experience in delivering solutions-based mainframe  technologies, ii) capabilities to offer tailor-made technology  application and infrastructure solutions, and iii) company's  reputable customer base and established relationships with  major technology partners.

• We forecast core net profit of RM24.3mn-RM35.5mn for FY23- 25F with 10.4-11% core net profit margin to be backed by robust  orderbook and tenderbook from existing and new clients as well  as thriving business expansion in regional markets.

• We initiate coverage on Infomina with a HOLD call and TP of  RM1.50 pegged at 27.2x PER (5% premium to 5-year sector  average of 25.9x) and CY24F EPS of 5.5 sen. The premium  valuation is justified by the reliable and consistent income  generated from its orderbook, notably in the Renewal segment.

Healthy Orderbook and Tenderbook from Diverse Customers

The outlook for orderbook replenishment and tenderbook stability appears optimistic, supported by various factors including ongoing  client acquisition from both new users and existing Broadcom clients, contracts renewal, and a growing trend towards renewing contracts  after completing turnkey projects. Infomina's extensive expertise and capabilities in IT service solutions have been instrumental in capturing client interest and driving engagement in IT-related works. Besides,  the Group is planning to increase its customer base by targeting the private sector, while also recognizing the importance of maintaining good relationships with public sector clients to protect the company's profits.

Growing Need for Mainframe Technology Implementation

Infomina is expected to benefit from growing needs of mainframe technology as most businesses rely heavily on mainframe technology,  making them an essential component in many organizations' digital transformation strategies. This is because mainframe systems offer unparalleled scalability and processing power, making them ideal for managing high-volume transactions and workloads.

Initiate with a HOLD call with TP of RM1.50

We initiate coverage on Infomina with a HOLD recommendation and TP of RM1.50. Our recommendation is justified based on our conservative assessment on Infomina's short-term outlook, taking into consideration the potential downside risks associated with the current US banking crisis, particularly in light of the group's significant exposure in the financial industry.

Source: BIMB Securities Research - 12 Apr 2023