Additional 5k CCTVs installation for DBKL ITMAX has secured a RM539.5m contract from DBKL to install an additional 5k CCTVs in Kuala Lumpur. The contract spans for 10 years, comprising a one year installation phase followed by 9 years subscription phase. We view this development positively as this provides (i) longer visibility of its recurring income stream and (ii) a testament of its technological leadership and QoS. We strongly believe that ITMAX is in a prime position to get the remaining 10k CCTV contracts over the coming years. We raise our FY26f earnings by 17% to impute in the job win. After earnings adjustment and raising our PE assumption to 45x (from 40x), our TP increases to RM4.71 based on FY26f EPS. Reiterate BUY. NEWSBREAK The deal. ITMAX has on 15 August 2024 secured a Variation Order (VO) dated 9 August 2024 awarded by Dewan Bandaraya Kuala Lumpur (DBKL) in respect of the Contract of “Kerja-kerja Membekal Perkhidmatan Penggunaan Sistem CCTV dan VMS Integrated Transport Information System (ITIS) Secara Sewaan Tahun 2021/2026 (2018/A051)” (Main Contract). The contract involves the installation of additional 5k CCTVs in Kuala Lumpur (KL) for a period of 120 months which comprises of 12 months installation period and 108 months subscription period for a contract value of RM539.5m. The commencement date will be fixed according to the work program agreed upon by ITMAX and DBKL. HLIB’s VIEW Stronger footing in DBKL. We view this development positively as this provides (i) longer visibility of its recurring income stream and (ii) a testament of ITMAX’s technological leadership and quality of service (QoS). This 5k additional CCTVs installation also comes as a surprise as DBKL historically only adds 1k CCTVs per year. Additionally, note that this is a longer contract period of 9 years from DBKL, compared to the previous duration contracts of 6-7 years. More to come. With this expansion, ITMAX’s video surveillance system will now encompass 10k CCTVs, seamlessly connected through its fibre optic network infrastructure across KL. In July 2024, Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi quoted that DBKL requires at least 20k CCTVs cameras installed throughout the city to monitor crime and traffic congestion. With this news, we are confident that ITMAX is in a prime position to get the remaining 10k CCTV contracts when rolled out over the coming years. Expecting higher margin. Although these additional 5k cameras’ rental is lower at RM1k per month (vs existing’s circa RM1.1k-1.2k per month), we opine they will yield higher margins as the incremental cost for command centre and fibre optics will be much lower by using the existing facilities. All-time high order book. With this addition, it has a total unbilled order book of RM1.5bn which will be recognised progressively up to May 2039. As end of 1Q24, ITMAX’s tender book stood at circa RM300-400m. Forecast. We raise our FY26f by 17% to impute in the job win. Reiterate BUY with higher TP of RM4.71 (from RM4.00). After earnings adjustment and raising our PE assumption to 45x (from 40x), our TP increases to RM4.71 based on FY26f EPS. We believe that this home-grown smart city integrated system and solution provider is a compelling case given its multi-year growth potential on the back of solid order and tender books.
Despite tech stocks in bursa getting bashed, this one still standing strong. The IB analyst was right that itmax is in a recession proof business. Resilient!
Big Hints ITMAX's managing director and chief executive officer William Tan Wei Lun added: "We have also secured new contracts that will serve as a catalyst for future financial growth."
Solid order book secures long term visibility. As end of 2Q24, ITMAX has a total unbilled order book of more than RM1.5bn which will be recognised progressively up to May 2039. As end of 2Q24, ITMAX’s tender book stood at circa RM300-400m.
Outlook. After securing 4 out of 16 Johor councils, we expect all to come on board over time to realize the integrated smart city system. Furthermore, these deals only comprise of DIS and smart traffic light system – we do not discount that other solutions such as networked lighting and smart parking could be included in the future. Along with the recently awarded DBKL VO #11 and maiden penetration into Penang, ITMAX is expected to continue to scale new heights.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
GemSeekers
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Posted by GemSeekers > 2024-08-19 09:36 | Report Abuse
if secured all , ITMAX going to the roof . buy before too late