INTEGRATED software solutions provider IFCA MSC Bhd has seen its shares fall precipitously in recent weeks amid the turmoil in the global markets. While its latest quarterly earnings point to a slowdown in growth, some analysts believe the stock should be worth triple its present price.

If indeed the market is near its bottom and buying appetite could soon return, improving market sentiment in the coming months could bode well for IFCA MSC.

Its warrant, IFCAMSC-WA, provides a cheaper proxy for investors who wish to ride the company’s prospects over the short term. The warrant carries an exercise price of 10 sen and a one-to-one conversion ratio. It expires in about five months on Feb 15, 2016.

In its latest earnings disclosure on Aug 25, IFCA MSC reported a net profit of RM5.7 million for the quarter ended June 30, 2015, up 90% from RM3 million during the previous year’s corresponding quarter. Revenue for 2QFY2015 grew to RM23.88 million from RM18.25 million in 2QFY2014.

IFCA MSC offers integrated software solutions and workflow technology for companies in the property sector and was a major beneficiary of the implementation of the Goods and Services Tax (GST) in April. It has also made significant inroads into China and counts property conglomerate Dalian Wanda as one of its customers there.

CIMB Research has a RM1.75 target price for IFCA, three times the stock’s 54.5 sen close on Aug 26.

Assuming zero premiums, IFCAMSC-WA would theoretically be worth RM1.65 if CIMB’s target price is reached, or a 96% upside from the warrant’s closing price of 45 sen on Aug 26.

“IFCA MSC remains an attractive proposition. Its ex-cash earnings multiple stands at only nine times. Short-term catalysts include the acquisition of its Indonesian distributor and the successful implementation of its e-commerce platform,” CIMB analyst Nigel Foo said in a note dated Aug 25.

It is also worth noting that IFCAMSC-WA has consistently traded near zero premiums relative to the underlying mother share, which is indicative of active trading interest in the warrant. As at Aug 26, the warrant closed at a 0.92% premium to IFCA MSC’s shares.

CIMB’s RM1.75 fair value is derived from IFCA MSC’s FY2016 forecast net profit of RM47 million, translating to an earnings multiple of 21 times. The research house is also forecasting strong double-digit earnings growth from FY2015 to FY2017.

This article first appeared in Capital, digitaledge Weekly, on August 31 - Septemberl 6, 2015.