KUALA LUMPUR: Infomina Bhd is targeting to finalise more contracts with local and foreign customers in the next 3-6 months after the company recently secured a US$28.4 million (RM125.1 million) contract from the Siam Commercial Bank Public Company Ltd (SCB).
"We estimate the new potential contracts totalling RM100 million-RM150 million will contribute positively to its renewal and turnkey segments.
"We estimate that Infomina's tenderbook currently stands above RM380 million, and we expect further expansion as it wins more contracts from new and existing customers in the information and technology (IT) transformation and mainframe space," CGS-CIMB Research said in a recent note.
To recap, Infomina's recent contract from SCB is to provide services under its renewal segment (provision of technology application and infrastructure operations).
The deal also aims to provide solutions for improving and implementing SCB's application programming interface (API) for transformation solutions and support services to SCB's core banking applications.
"We gather that this is to support SCB's goal to transform into a regional financial technology group beyond the fintech economy," CGS-CIMB Research noted.
CGS-CIMB Research is positively surprised by this win as it will further expand Infomina's orderbook by 32.2 per cent, from RM401 million as of end-November 2022 to RM530 million, which should last till end-FY27.
This contract value will be recognised over three years, from 1 January 2023 to 31 December 2025.
"We view the profile of SCB as a leading bank in Thailand as well as in ASEAN as a testament to Infomina's capabilities in the mainframe and IT transformation space," the research firm noted.
"We lift our FY23–25 earnings per share (EPS) to account for more contract wins," it said.
The research firm has maintained an 'Add' call for Informina and raised the target price to RM1.70 from RM1.37.
"In our view, the premium is justified given Infomina's unique exposure to rising demand in the mainframe and related businesses, a regional position as a sole appointed value-added distributor (VAD) in Asia Pacific for Broadcom's mainframe software, and a robust earnings growth profile (3-year 2021–24 EPS compounded annual growth rate (CAGR) of 41.6 per cent versus local peers' weighted average of 13.6 per cent)," it said.
Re-rating catalysts include robust EPS growth and further expansion via winning more contracts over the next 3–6 months.
The research firm said downside risks include the non-renewal of Tier 1 VAD status with Broadcom, a sharp dip in orderbook value, and lower-than-expected margins.