• MYR0.525 FV, based on 15x CY23F P/E. Infomina will raise MYR32.47m from its IPO to primarily fund working capital and R&D expenses. The group is well positioned given the demand for mainframe computing power in the age of the digital economy. Its 3-year earnings CAGR of 15.5% will be driven by its strong orderbook (cover ratio: 2.2x) & tenderbook, technological advancement, geographical expansion and intensified marketing efforts.

• Offers tailor-made technology application & infrastructure solutions. Infomina provides software licenses to comprehensive, tailor-made technology solutions which may encompass consultation and assessment; procurement of hardware and software; design and implementation; and ongoing support and maintenance. The group focuses on delivering turnkey or comprehensive end-to-end IT solutions to bridge business disruption through digital transformation, automation, sustainability and resiliency. It also provides a nursing period to serve exclusively for the seamless integration of existing and new systems. In addition, Infomina is the sole appointed distributor and Premier Tier 1 Value-Added Distributor of Broadcom Mainframe Software in the CA Partner Regions.

• Reputable customer base. As a testament to its abilities and market reputation, Infomina has managed to establish a strong customer base regionally, mainly government bodies (49.3% of FY22 revenue), financial institutions (37.9% of FY22 revenue), as well as industry players from automotive, telecommunications etc. Its number of active customers has grown from 14 in FY19 to 60 as at 30 Sep 2022. Also as at 30 Sep 2022, the group completed projects totalling MYR370.3m. Its technical skills, domain knowledge and ability to deliver comprehensive and tailor-made technology solutions will allow Infomina to forge stable business relationships with new customers, and be the foundation for continued business growth.

• Strong orderbook. Infomina has secured MYR443.6m of orders spanning the next five financial years, with 34.7% in turnkey projects and 65.3% in renewal projects. The group has also tendered for another MYR375.9m projects, out of which 55% come from the turnkey segment. Management expects robust orderbook replenishment from new and existing customers based on their tenders as most of its existing turnkey customers tend to renew the service and maintenance. It also looking to diversify its customer base to other South-East Asian countries.

• Earnings forecast & valuation. We project a 3-year earnings CAGR of 15.5% and ascribe a P/E of 15x to its CY23F earnings to derive our FV of MYR0.525. Its FY23F (May) ROE is 23% vs local peer of 21.2%. The valuation is in line with the 2-year consensus forward P/E of its local and regional peers. Risks: Unexpected delays of technology application and infrastructure solution projects deliverables, higher-than-expected cost required to deliver technology application and infrastructure solution projects, customer concentration risk, and shortage of IT staff.

Source: RHB Securities Research - 11 Nov 2022