ITMAX has recently accepted MBPG’s LOA to provision video surveillance and smart traffic light system services for a period of 15 years for a contract sum of RM79m.
HLIB says it remains upbeat and this development strengthens its belief that this will propel its earnings to the next level. Record high total unbilled order book of RM903m will be recognised progressively up to May 2039. MBJB, MBIP, and MBPGare only 3 out of 16 councils in Johor and the house expects all to come on board over time to realize the integrated smart city system.
Akin to MBJB and MBIP, this 15-year contract is one of the longest – this will grant ITMAX a great opportunity to upsell more features, expand coverage and job scope to MBPG.
Similar to DBKL, MBJB and MBIP’s the rental of each of the 340 cameras under this deal yields circa RM1.2k per month. In turn, we expect its video surveillance and analytics services’ high margin to be sustained. Recurring traffic management income.
MBPG contract includes a smart traffic light system involving 33 controllers, leaving much room to grow as there are more junctions in Pasir Gudang. Contrary to its existing one-off billing for a traffic management system, this will be charged based on a monthly rental of circa RM2.0k per month, enhancing its recurring income stream further over even longer visibility.
With this addition, it has a total unbilled order book of RM903m which will be recognised progressively up to May 2039. More in the pipeline. MBJB, MBIP and MBPG are only 3 out of 16 councils in Johor and expect all to come on board over time to realize the integrated smart city system.
Furthermore, these deals only comprise video surveillance services and smart traffic light systems – the house does not discount that other solutions such as networked lighting and smart parking to be included in the future.
HLB reiterates a BUY with an unchanged TP of RM2.08, pegged to 25x PE multiple of FY25f EPS. It believes 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 orders and tender books.
