IFCA MSC falls 4.79% despite analysts bullish on the stock

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KUALA LUMPUR (May 22): IFCA MSC Bhd fell among the top ten active counters again today for declining 4.79% in the first half of the trading day although analysts suggests that investors should remain invested in the stock.

At 12.30pm, the stock was traded 8 sen lower to RM1.59 with 16.28 million shares traded. Meanwhile its warrants, IFCAMSC-WA, fell 6.25% or 10 sen to RM1.50.

Yesterday IFCA’s (fundamental: 3; valuation: 0.80) shares fell 3.47% to a closing price of RM1.67 from an opening price of RM1.73.

“Its share price came under selling pressure yesterday, which is not a surprise as the stock’s trading pattern is usually “buy on rumours, sell on news”. Further price weakness would be an opportunity to accumulate,” said CIMB Research in a report adding that investors should remain invested in the stock.

Seeing that the company has a valuation score of 0.80, this indicates the attractiveness of the stock in terms of valuations is low. TheEdge Research noted that the stock is high volatility which means that the company’s share price has been volatile over a predefined period.

Having a fundamental score of 3, which suggest strong fundamentals and attractive valuations, it also indicates that IFCA has a strong balance sheet. As at March 31, 2015, the company has a cash pile of RM53.81 million and total assets worth RM110.92 million.

According to TheEdge Research, the stock is currently trading at a price earnings ratio of 30.36 times.

Meanwhile, CIMB said in its note that IFCA is looking to launch seven software modules under service as a software (SaaS) in Malaysia, more than the three modules it had indicated last month.

It also said that IFCA has two major areas of growth in Indonesia which is the migration from Windows-based platform to mobile-based platform and SaaS to target the smaller developers.

“Indonesia offers great potential and with the right strategy, sales from this country could be larger than Malaysia’s revenue. The country’s population of around 240 million is more than 8 times that of Malaysia and Indonesia needs 800,000 new houses to meet demand annually.

“On the subject of SaaS, the launch of seven software modules under SaaS in Malaysia indicates that management is serious about growing its recurring income through SaaS,” it said.

The research house added that IFCA has a software module for the domestic construction and engineering market and demand should be strong among the contractors as most do not have proper accounting systems which are goods and service tax compliant.

CIMB has an “add” call on the stock with a target price of RM2.04.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)