• Business profile: IFCAMSC (IFCA, listed in July 2003), is a leading business software solution company specializing in the property industry. It has a monopoly-like business model with close to 70% market share in the Malaysian property software industry.
• To date, IFCA has developed its software to meet the needs of property developers and property managers. These properties cover shopping malls, chain stores, residential, industrials, commercials, resorts, hotels and recreational sport clubs. The company currently has circle 1,700 customers spread over seven countries. Some of IFC A’s major cus tomers are PNB, Sime, Ecoworld, SP Setia, Mah Sing, Sunway (from Malaysia), Wanda, R&F, Country Garden Group (China), CapitaLand (Singapore), Prima Buana Internusa, Jakarta Land & Metropolitian Kentjana (Indonesia), Growth Point Group (South Africa) and Mitsui & Co (Japan). In terms of geographical breakdown, Malaysia (accounted for more than 70% of FY14 revenue) and China (over 10%) were the top two contributors.
• Negatives mostly discounted after recent rout in share prices. IFCA’s s hare prices nosedived 75% from 52-week high of RM1.87 (22 May) to a 52-week low of RM0.46 (25 Aug) before ending at RM0.885 yesterday. At RM0.885, IFCA is trading at 14.2x FY16E P/E, which is 36% below its average 5-year historical and peers ’ P/E of 22.4x. The selldown was mainly due to weakening 2Q15 results on QoQ basis with revenue and net earnings tumbled by 25% and 41%, respectively amid slowing sales in both China and Malaysia markets as well as the normalisation from the high base in 1Q15 (which was previously boosted by high demand of software upgrades for GST implementation).
• In its 2Q15 results review, IFCA remained cautiously optimitic of its business growth because of market leadership and large customer base despite anticpating challenging economic climate in Malaysia and overseas. In addition, IFCA has embarked on various initiatives to grow sustainable and recurring revenue streams. These include: 1) the proposed acquisition of PT IFCA Consulting Indonesia to further expand its direct presence in the country; 2) Software As A Service (SaaS) solutions offering on a monthly subscription basis for SMEs; and 3) an end-to-end property e-commerce market place which generates long term recurring transactional revenue.
• Poised to break above downtrend line. After rebounded to a high of RM1.03 on 13 Oct from 52-week low of RM0.46, IFCA share prices are building its base near RM0.835 (50-d SMA). If share prices can swing past immediate resistance near RM0.905 (10-d SMA and downtrend line), the next upswing should lift prices towards RM0.935 (mid Bollinger Band) before advancing towards our LT objective at RM1.00 psychological barrier (38.2% FR).
• Aggressive traders may start to nibble now. Key supports are RM0.86 (lower Bollinger Band) and RM0.835. Cut loss at RM0.825.

Source: Hong Leong Investment Bank Research - 4 Nov 2015