KUALA LUMPUR (Dec 1): CGS-CIMB has initiated coverage on Infomina Bhd with an 'add' call and a target price of RM1.15, implying 20 times calendar year 2024 price-to-earnings ratio (PER).

The IT solutions provider specialising in mainframe technology was recently listed on the ACE market last Friday (Nov 25).  

CGS-CIMB projected a three-year earnings per share CAGR of 29.6% (FY2022-2025) for Infomina, driven by a robust order book (cover ratio at 2.2 times), coupled with new clients and geographical expansion.  

“As the sole Tier 1 VAD (value added distributor) for Broadcom Mainframe Software in eight countries currently, Infomina should benefit from rising demand for mainframe services,” said the research house.

It said Infomina has two key business segments, namely turnkey — design and delivery of technology infrastructure solutions, which accounts for more than half of revenue (50.3% of FY2022 revenue), and renewal — technology infrastructure operations, maintenance and support services, which account for the remainder of revenue.

CGS-CIMB said Infomina’s key strength is being the sole appointed Premier Tier 1 VAD of Broadcom Mainframe Software in eight countries since 2019.

The research house said the group can benefit from growing adoption of Broadcom mainframe technology and repeat business from users of Broadcom mainframe software.

It noted that Infomina has an orderbook of RM443.6 million (2.2 times of FY2022 revenue) and tendered for projects with total value of RM376 million. Net cash stood at RM73.3 million in first quarter of FY2023 (1QFY2023).

Meanwhile, Rakuten in an IPO note dated Nov 25 noted that Infomina does not have any formal dividend policy and plans to utilise its resources to grow its business. Rakuten has a "buy" call on Infomina with a target price of 61 sen.

It said based on the latest quarterly results, the company has a net gearing of less than 0.1 times.

“As the proceeds from [the] IPO (initial public offering) will be used to expand its businesses, we expect the company to maintain its current low gearing level,” it added.

The group's listing raised approximately RM32.47 million via a public issue of 81.17 million new ordinary shares at an issue price of 40 sen per share.

Of the proceeds raised via this IPO, 43% would be used for working capital, 23.4% for strengthening the group's research and development capabilities, 17% for regional expansion, 2.7% for branding and marketing, and the remainder for listing expenses.

At 11.15am on Thursday (Dec 1), Infomina shares were trading at 72.5 sen, up 25% from the closing price of 58 sen on Nov 30.