Broker: UOB Kay Hian
Date of Report: Wednesday, 16 July 2025

ITMAX Systems: Riding Malaysia’s Smart City Boom – Multi-Year Growth Potential Amid Expanding Market

Overview: ITMAX Systems at the Forefront of Malaysia’s Smart City Transformation

ITMAX Systems Berhad (ITMAX) stands out as a leading provider of public space network systems in Malaysia, specializing in smart lighting, video surveillance, traffic management, and communications network services. With a solid foothold in key urban centers such as Kuala Lumpur, Johor, and Penang, ITMAX is a key participant in the country’s smart city initiatives and is poised for substantial expansion across both West and East Malaysia.

Stock Snapshot

• Share Price: RM3.71
• Target Price: RM4.80 (Upside: +29.4%)
• Market Cap: RM3,827.7 million (~US\$902.5 million)
• Shares Issued: 1,031.7 million
• Major Shareholders: SENA HLD SDN (46.3%), JULIUS BAER GROUP (6.8%), GENDA SENSASI SDN (4.6%)
• 52-Week High/Low: RM4.16 / RM2.75
• FY25 Net Asset Value per Share: RM0.39
• FY25 Net Cash per Share: RM0.11

Strong Growth Outlook: Momentum in Contracts and Expanding Market

ITMAX has already established a strong presence in major Malaysian cities but sees ample room for further expansion nationwide. The company is expected to sustain its contract-winning streak through the year, bolstered by ongoing smart city initiatives. Its foray into digital twin technology is set to unlock new revenue streams, while its proven track record in AI-enabled solutions and deep database expertise provide a competitive edge. Despite elevated short-term valuations, the company’s prospects remain robust, justifying a bullish stance.

Key Catalysts for Earnings Growth in 2025 and Beyond

• Sequentially Stronger 2Q25 Expected: – 1Q25 core net profit came in at RM20.4m (-4% qoq, +13% yoy), representing just 22% of full-year expectations due to typical pre-implementation phases limiting contract recognition. – Earnings are set to accelerate from 2Q25, driven by:
  • Higher car parking collections from the Johor smart parking project, with occupancy rising to 25–30%.
  • Increased recognition of one-off contracts in the supply, installation, and maintenance services segment.
  • Ramp-up in revenue from Johor CCTV contracts throughout the year.
• Ongoing Tender Participation Across East and West Malaysia: – ITMAX continues to bid for smart city contracts in new states, leveraging its industry-leading AI accuracy (85–90%) and status as one of the few MCMC-licensed network facilities providers for fiber optic infrastructure, giving it a cost edge.
• Digital Twin Business on the Horizon: – Launching in 2026, this initiative will integrate ITMAX’s CCTV, smart traffic, and parking systems into a local virtual simulation platform for urban planning. – The platform, prioritizing data sovereignty, will use a subscription model and is expected to deliver margins comparable to high-margin CCTV projects. – Management anticipates at least 5% of group revenue contribution from digital twin by 2026.

Financial Performance: Robust Multi-Year Growth Trajectory

Contract Wins and Market Expansion: Kuala Lumpur, Johor, and Penang in Focus

Kuala Lumpur

• ITMAX secured a major contract from Dewan Bandaraya Kuala Lumpur (DBKL) for 5,000 additional CCTVs in 2024, doubling the city’s count to 10,000 CCTVs.
• The government targets 20,000 CCTVs by 2028, but management estimates a need for at least 50,000 units for comprehensive traffic and city management, referencing Singapore’s 109,000 and Bangkok’s 78,000 CCTVs as benchmarks.

Johor and Penang

• In Johor, ITMAX holds contracts with only five of 16 local councils, currently managing 1,835 CCTVs (vs. 10,000 in KL), 65 smart traffic junctions (vs. 600 in KL), and 61,776 smart parking spaces.
• Penang contracts total RM41.6m, with projected demand for at least 10,000 CCTVs and Johor Bahru alone requiring 34,000 units.
• Smart parking solutions in Johor now reach 25-35% occupancy, with physical coupons phased out since January 2025 and enforcement systems fully operational. Management believes there is potential to double the current number of smart parking spaces, in line with the state’s push for a unified system integrating CCTV, traffic lights, and smart parking (TAM for Johor: 200,000-300,000 spaces).

Valuation and Recommendation

• Valuation: BUY recommendation maintained with a target price of RM4.80, pegged to 43x 2026F PE (+1.5SD above mean). This premium is justified by ITMAX’s multi-year growth potential and strong order book, underpinned by advanced AI and data-driven solutions.
• Earnings Forecast: No changes to earnings forecasts.

Environmental, Social, and Governance (ESG) Initiatives

• Environmental: Replacing halogen streetlights in Kuala Lumpur with energy-efficient LEDs.
• Social: Workforce gender balance at 50% male-female; zero work fatalities recorded in 2023.
• Governance: No reported cases of bribery, corruption, or disciplinary action; zero customer privacy breaches or data losses; 90% procurement from local suppliers.

Key Financial Metrics and Ratios (2024-2027)

Conclusion: ITMAX Poised for Sustained Outperformance

ITMAX Systems is uniquely positioned to capitalize on Malaysia’s accelerating smart city initiatives, driven by expanding contract opportunities, innovative digital twin solutions, and strong execution capabilities. The company’s solid order book, cutting-edge AI technology, and proven management reinforce its multi-year growth outlook, making it a compelling investment for those seeking exposure to Malaysia’s digital infrastructure revolution.

Disclosures

UOB Kay Hian Private Limited prepared this report in accordance with applicable regulations and ethical standards. The report is intended for information purposes only and does not constitute investment advice. For further details on the distribution and regulatory disclosures, please refer to the original report.