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

ITMAX Systems Berhad: Riding the Smart City Wave with Robust Growth Prospects and Digital Twin Ambitions

Overview: ITMAX Systems Positioned for Multi-Year Growth

ITMAX Systems Berhad (ITMAX) is making significant strides as a provider of public space network systems, specializing in lighting, video surveillance, traffic management, and communications network services. With its pivotal role in Kuala Lumpur’s smart city initiatives and ambitious expansion across Malaysia, ITMAX is capturing investor attention. The company’s cutting-edge adoption of AI and upcoming digital twin technology are set to further fuel its growth trajectory.

Stock Snapshot and Performance

• Share Price: RM3.71
• Target Price: RM4.80 (Upside: +29.4%)
• Market Cap: RM3.83 billion (US\$902.5 million)
• Shares Issued: 1,031.7 million
• 52-week High/Low: RM4.16 / RM2.75
• Major Shareholders:
  • SENA HLD SDN: 46.3%
  • JULIUS BAER GROUP: 6.8%
  • GENDA SENSASI SDN: 4.6%
• FY25 NAV/Share: RM0.39
• FY25 Net Cash/Share: RM0.11

Strong Q2 2025 Earnings Expected: Key Growth Catalysts Ahead

After a softer first quarter—where core net profit reached RM20.4m (-4% qoq, +13% yoy), representing just 22% of full-year expectations—ITMAX is poised for a sequential rebound in Q2 2025. This anticipated growth is driven by:

• Rising car parking collections from the Johor smart parking project, with occupancy rates increasing to 25-30% in Q2 2025.
• Greater recognition of one-off contracts from the supply, installation, and maintenance services segment.
• Higher revenue recognition from the Johor CCTV contract, which is ramping up over the year.

With a solid presence in Johor, Kuala Lumpur, and Penang, ITMAX is actively tendering for contracts across both East and West Malaysia. The company’s demonstrated AI accuracy of 85–90%—the highest among peers—positions it favorably for new wins. Additionally, being a licensed network facilities provider with MCMC approval for developing fiber optic infrastructure provides a significant cost advantage.

Digital Twin Technology: A Strategic New Business for 2026

ITMAX plans to launch its digital twin business in 2026, leveraging its smart city infrastructure (CCTV, traffic, and parking systems) to create localized virtual simulation platforms for urban planning and traffic management. Unlike global competitors like Nvidia’s Omniverse, ITMAX’s digital twin solution emphasizes data sovereignty, catering to state government preferences for compliance, security, and control. Built in-house with low capex, this subscription-based model is expected to achieve margins similar to ITMAX’s high-margin CCTV projects. Management expects digital twin revenue to contribute at least 5% of group revenue by 2026, marking a significant expansion of its smart city capabilities.

Key Financial Highlights

Major Regional Expansion and Smart City Initiatives

Kuala Lumpur: Doubling Down on CCTV and Future Potential

In 2024, ITMAX secured a major contract from Dewan Bandaraya Kuala Lumpur (DBKL) to install 5,000 additional CCTVs, doubling the city’s total to 10,000. The government’s 2028 target is 20,000 CCTVs, but management believes at least 50,000 units are needed to fully support traffic, safety, and city management—especially when compared with Singapore’s 109,000 and Bangkok’s 78,000 CCTVs. This highlights a long runway for future expansion in Kuala Lumpur.

Penang and Johor: Underpenetrated Markets with High Demand

• In Johor, ITMAX currently holds contracts with only five of 16 councils, covering 1,835 CCTVs, 65 traffic management junctions, and 61,776 smart parking spaces. This is a fraction of the potential, considering Kuala Lumpur’s 10,000 CCTVs and 600 traffic management junctions.
• Penang has awarded ITMAX a CCTVs contract worth RM41.6 million. Management sees robust demand, with estimates of at least 10,000 CCTVs needed in Penang and Johor Bahru alone requiring 34,000 units.

The installation phase for existing CCTV contracts in Johor is already complete, with more contract awards expected this year.

Smart Parking: Ramping Up with Digital Enforcement

ITMAX launched its smart parking solutions in Johor in 2024. Revenue impact was minimal last year as the enforcement system (CCTVs on motorcycles, enforcers) was still being set up and physical parking coupons were still valid. With the full phase-out of physical coupons in January 2025 and the enforcement system now operational, occupancy rates have risen to 25–35%. ITMAX has secured 61,776 smart parking spaces thus far and is well positioned to double this by securing another 60,000 spaces in Johor Bahru, aligning with the state’s move towards integrated smart city systems.

Valuation, Recommendation, and Earnings Outlook

• Recommendation: Maintain BUY
• Target Price: RM4.80 (based on 43x 2026F PE, +1.5 SD above mean)
• Valuation justified by strong multi-year growth prospects, robust orderbook, and technological edge in AI and data analytics.
• No changes to earnings forecasts in this update.

ITMAX leverages proprietary AI technologies and a unique database to deliver superior solutions, underpinning its competitive advantage in the smart city solutions arena.

Environmental, Social, and Governance (ESG) Commitments

• Environmental: Replacing halogen streetlights in Kuala Lumpur with energy-efficient LED alternatives.
• Social: Maintaining a balanced 50% male-female employee ratio and recording zero work fatalities in 2023.
• Governance: Zero cases of bribery, corruption, or disciplinary action, and zero substantiated complaints of privacy breaches or customer data loss. 90% of 2023 spending was with local suppliers.

Financial Statements Snapshot

Profitability and Leverage Metrics

• EBITDA Margin: Improving from 54.5% in 2024 to 66.7% in 2027F
• Net Margin: Rising from 36.5% in 2024 to 44.2% in 2027F
• ROE: Strong and stable, ranging from 19.3% to 20.7% through 2027F
• Net Debt/(Cash) to Equity: Remains negative, highlighting a net cash position

Conclusion: ITMAX Systems—A Premier Smart City Solutions Provider on the Rise

With a robust orderbook, clear expansion strategy, and innovative ventures like digital twin technology, ITMAX Systems is exceptionally well-positioned for growth in Malaysia’s rapidly advancing smart city landscape. The company’s strong financials, ESG commitments, and leadership in AI-driven solutions support a compelling investment case for both medium and long-term investors.