KUALA LUMPUR: ITMAX System Bhd's recent contract extension from Kuala Lumpur City Hall (DBKL) provides longer visibility of its recurring income stream, according to Hong Leong Investment Bank Sdn Bhd (HLIB Research).
The research firm viewed the extension positively as it also served as a testament to the company's technological leadership and quality of service, as well as providing confidence and alleviating the company's speculated political or regulatory concerns post the 15th general election.
"Recall that the total CCTVs installed in DBKL currently stand at 5,000, and there was no addition in the financial year 2023 (FY23).
"However, we strongly believe that DBKL will soon resume its tradition of adding 1,000 CCTV per year after this contract period alignment exercise, which will ease future contract negotiations and implementation processes," it said in a note.
ITMAX System obtained a contract extension valued at RM105.3 million from DBKL on Friday.
This extends ITMAX's provision of the integrated transport information system (ITIS), encompassing video surveillance and video messaging signage (VMS), beyond its initial end date in 2026.
The contract extension involves 2,909 CCTVs, while the variation order covers system integration, system enhancement, and additional features. All-time high order book.
With this addition, it has a total unbilled order book of RM1.1 billion, which will be recognised progressively up to May 2039. As of the of the end of FY23, ITMAX's tender book stood at circa RM500 million.
The firm kept its "buy" call on the company with an unchanged target price of RM2.90.
"We believe that this home-grown smart city integrated system and solution provider is a compelling case given its multi-year growth potential on the back of solid order and tender books."