KUALA LUMPUR (June 5): Shares in ITMAX System Bhd (KL:ITMAX) extended gains to a new all-time high on Wednesday, after analysts said the traffic management and video surveillance company is set for more jobs in Johor.

ITMAX climbed as much as 2.48% or six sen to RM2.48, adding to Tuesday’s 6.1% gain. The stock closed at RM2.42 on Wednesday, valuing the company at RM2.49 billion, after 4.77 million shares changed hands.

Analysts said revenue from the latest smart parking system contract from the Iskandar Puteri City Council will provide additional recurring income and flagged potential for ITMAX to expand the service to the other 15 councils.

On Tuesday, Southmax Sdn Bhd, a 65%-owned subsidiary of ITMAX, was awarded a contract from the city council to operate the smart parking system for 32,025 on-street parking bays for 15 years starting June 1, 2024.

If the contract is expanded to 200,000 parking bays in the greater Johor area, with six days parking operations at four hours per day and 60 sen per hour, the system could generate an average of RM11.5 million monthly or RM138.2 million per year, said Hong Leong Investment Bank in a note to clients.

That could increase ITMAX’ bottom line by RM48 million per year based on the same 70:30 revenue sharing and 50% margin between ITMAX and the council, Hong Leong Investment Bank said.

Shares of ITMAX have risen over 35% year-to-date, tracking the broad rally in the technology sector. All three analysts covering the stock have a "buy" rating with a 12-month target price of RM2.78, indicating a potential 13% upside from its current price.

Under the latest contract, ITMAX will manage and maintain the smart parking system in the Iskandar Puteri district. Revenue generated will be split between ITMAX and the city council in a 70:30 ratio, with the revenue-sharing model applied to all cash proceeds collected via its parking app, Parkmax@Johor.

This would be ITMAX’s first smart parking contract following its acquisition of 70% equity interest in Aim-Force Software in August last year.

ITMAX currently holds closed-circuit television contracts with four district councils in Johor: the Iskandar Puteri City Council, the Johor Bahru City Council, the Kulai City Council, and the Pasir Gudang City Council.

Maybank Investment Bank said that every incremental 10,000 parking bays assigned to ITMAX has the potential to add RM4.1 million to ITMAX’s annual turnover and RM1.4 million to profit after tax and minority interests.

“We believe that the usage of Parkmax app is highly scalable across other districts in Johor due to its user-friendly interface,” the research house added.