PETALING JAYA: Shares in ITMax System Bhd hit an all-time high yesterday, following its appointment by the Iskandar Puteri City Council (MBIP) as the operator for smart parking in Iskandar Puteri, Johor, for 15 years.
At 5pm, the traffic management and video surveillance company’s share price closed at RM2.42. Year-to-date, the shares have risen 35%.
According to Maybank Investment Bank Research (Maybank IB Research), the contract would in effect create a new revenue stream for ITMAX, allowing it to expand its reach in Johor.
“Maintain ‘buy’ on a compelling long-term outlook as ITMAX rides on the tailwinds of Johor’s economic growth.
“This is ITMAX’s first smart-parking contract following its acquisition of 70% equity interest in Aim-Force Software for RM7.2mil in August 2023,” the research house said.
Maybank IB Research has maintained its earnings forecasts and target price of RM2.65 for the company.
This is after having imputed parking revenue of RM7.4mil, RM11mil and RM14.7mil for 2023 to 2026.
The research house pointed out that the revenue generated from operations will be split between its 65%-subsidiary Southmax Sdn Bhd (SSB) and MBIP at a 70:30 ratio, with the revenue-share model applied to all cash proceeds collected via SSB’s parking app for smartphones, Parkmax@Johor.
MBIP successfully trialled SSB’s app in Bandar Iskandar Puteri from April 1 to April 30, 2024 and intends to fully digitise parking in the district by Jan 1, 2025.
Maybank IB Research said it expects the new venture to be earnings-accretive and scalable.
“We estimate that every additional 10,000 parking bays assigned to SSB has the potential to add RM4.1mil and RM1.4mil a year to ITMAX’s turnover and profit after tax and minority interest, respectively.
“In addition to MBIP’s 32,000 street parking bays, there are roughly 90,000 parking bays under the purview of the Johor Baru City Council and a further 30,000 each under the Pasir Gudang and Kulai councils. ITMAX has contracts to operate and maintain closed circuit TV systems with all four councils.
“We believe that SSB’s Parkmax app is highly scalable across other districts in Johor (subject to SSB being granted approval first by the respective city councils) due to its user-friendliness,” it said.
Similarly, Hong Leong Investment Bank Research (HLIB Research) said it remained upbeat on the company.
This is as the latest development would propel ITMAX’s earnings to the next level, as there is a significant opportunity for the group to expand the service to the other 15 councils in Johor.
The research house estimated that based on the revenue sharing of 70:30, this would contribute RM14.7mil a year to ITMAX and lift its bottom line by RM7.5mil to RM8mil a year on a 50% margin assumption.
HLIB Research has reiterated its “buy” recommendation with an unchanged target price RM2.90, pegged to an unchanged 35 times price-earnings multiple of financial year 2025 earnings per share.
“We believe that the homegrown smart city integrated systems and solution provider is a compelling case, given its multi-year growth potential on the back of solid order and tender books,” it added.