PETALING JAYA: Infomina Bhd ’s earnings for its second half of financial year 2024 (2H24) is expected to be sequentially stronger, driven by contributions from the higher margin renewal segment, according to AmInvestment Bank Research.
The research house anticipates the group’s financial year 2024 (FY24) topline growth to be moderated by the slower turnkey project recognition, which is in line with more cautious sales projections and 4% lower FY24 to FY25 profitability.
The assumptions are backed by Infomina’s RM600mil tender book, which AmInvestment Bank Research reported had dropped by 12% on a quarterly basis as of Nov 30, 2023.
“We also do not expect any strong positive surprises in average fees from customers over-utilising the group’s services as in the third quarter of FY24 (3Q24), as Infomina guided that these charges normalised from 1Q24 onwards,” it added.
On a brighter note, given the group’s shortlisting and track record of accomplishment, Infomina remains optimistic about obtaining certain contracts for turnkey projects by the end of FY24.
AmInvestment Bank Research noted that once the turnkey projects have been awarded, the group is likely to partially recognise revenue within three months.
Turnkey projects also foster long-term customer relationships and have the potential to result in renewal contracts, which could generate recurring revenue for it.
The turnkey projects that make up 70% of Infomina’s current RM600mil tender book are primarily based in Malaysia and from government entities, while the remaining contracts are renewals.
Moving forward, the mainframe technology solutions provider will be focusing on its other key markets, namely, Thailand and the Philippines, to provide value-added application programming interface software to existing customers within the renewal segment.
At the end of November 2023, Infomina’s outstanding order book was valued at RM431mil. AmInvestment Bank Research maintained a “hold” call on Infomina with a lower fair value of RM1.60 per share, pegged to FY24 price earnings of 25 times.