• An established property software specialist. IFCA is a business software solution company specializing in the Property industry for 30 years. Over the years, it 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. In addition, IFCA has diversified to provide solutions for construction and hospitality industries plus human resource management. Its clientele is spread over countries in ASEAN, Australia, China, Middle East, Africa etc.

• A good start for 2017. In 1Q17, IFCA’s revenue grew 9.1% yoy to RM19.3m (higher than 1Q-3Q FY2016), mainly attributed to sales contribution from overseas segment (+26% to RM10.1m), offset a 5.2% drop in local sales at RM9.2m. With higher revenue and improved margins from a more effective operational structure coupled with lower provisions for doubtful debts, the group recorded its 3 rd consecutive quarterly profit of RM1.7m compared with RM4.5m loss in 1Q16. QoQ, revenue fell 10.2% (local sales: -17.2%; overseas: -8.1%) mainly driven by fewer business days. Earnings declined 66% caused by lower revenue and higher tax expenses of RM1.7m in 1Q17 (vs –RM0.7m in 4Q16).

• In its 1Q17 review, Management is cautiously optimistic that the Malaysia businesses will improve as there are signs of recovery in the Property Industry. Business units like HR software and Property365 has gained good traction and expected to contribute positively. Management also anticipates its businesses in China and Indonesia to continue to grow and contribute significantly. The maintenance revenue segment is expected to achieve strong growth from RM 27m recorded in FY2016. As at 31 March 2017, the Group has unbilled orders in hand amounting to RM23.8m.
   
• Signs of bottoming up amid the hammer candlestick pattern? IFCA’s share price plunged 30.5% from 52-week high of RM0.54 (22 Feb) to a low of RM0.375 yesterday before ending at RM0.39, with a total 14.3m shares transacted (104% higher than average monthly volume of 7m shares). The hammer candlestick formation yesterday and steeply oversold slow stochastic indicator coupled with active volume could suggest limited downside risks for IFCA’s share prices with a potential technical rebound. Fundamentally, it is supported by netcash/share of 11.5 sen (or 29% of share price) coupled with prospects of strong FY17- 18 earnings turnaround. A decisive breakout above RM0.40 psychological level will spur prices higher to retest the downtrend line resistance at RM0.43 (or 38.2% FR) before reaching our long term target of RM0.47 (23.6% FR). On the flip side, failure to hold near RM0.375 support may weaken share prices towards RM0.365 (61.8% FR) and RM0.325 (76.4% FR) levels. Cut-loss at RM0.36.

Source: Hong Leong Investment Bank Research - 1 Jun 2017