IFCAMSC (0023) : Record earnings for IFCA MSC
KUALA LUMPUR: CIMB Equities Research is upbeat on the outlook for IFCA MSC after it posted record net profit for the third quarter ended Sept 30, 2014.
“At 178% annualised 9M14 net profit, IFCA’s 3Q results was above our (no consensus) expectations due to higher-than-expected top-line growth,” said the research house on Thursday.
CIMB Research raised its FY14-16 EPS by 36%-100% to reflect stronger top-line growth and target price also rises based on unchanged 21 times 2016 price-to-earnings (P/E) in line with domestic peers.
“The stock remains an Add with potential catalysts such as record 3Q14 net profit and move to Main Board in 2015,” it said.
It said IFCA's higher-than-expected 3Q14 profit was mainly due to its strong top line growth, coming from domestic and the China business.
Year-to-date, only RM8.4mil Goods and Services Tax (GST) jobs were completed while the research house is targeting 80%-90% revenue growth from the China market this year.
“The company only has 100 customers in China and we understand there are 40,000 property companies in that country. High operating leverage business
“IFCA’s software business has a high operating leverage. Most of its operating costs is fixed (labour is 65% of its operating costs) and its top line has reached the sweet spot this year,” said the research house.
CIMB Research said IFCA’s revenue is now more than sufficient to cover its operating costs and as such, most of the revenue incremental growth should follow directly to the bottom line. This is shown by 3Q14’s EBITDA margin which was at 37.4% compared to 18.0% in 2Q14.
“The 3Q revenue was up 40% on-quarter at RM25.7mil. IFCA is a net cash company, RM34.9mil or 7.7 sen net cash/share as at end-September.
“With limited capex spending and R&D at only RM4mil to RM6mil annually, the company’s cash pile will continue to grow in time. In addition, by next year, we more of the warrants would be converted (143.3 million outstanding warrants, exercise price 10 sen and expires in February 2016) and this could raise additional RM14.3mil for the company,” said the research house.
http://www.thestar.com.my
KUALA LUMPUR: CIMB Equities Research is upbeat on the outlook for IFCA MSC after it posted record net profit for the third quarter ended Sept 30, 2014.
“At 178% annualised 9M14 net profit, IFCA’s 3Q results was above our (no consensus) expectations due to higher-than-expected top-line growth,” said the research house on Thursday.
CIMB Research raised its FY14-16 EPS by 36%-100% to reflect stronger top-line growth and target price also rises based on unchanged 21 times 2016 price-to-earnings (P/E) in line with domestic peers.
“The stock remains an Add with potential catalysts such as record 3Q14 net profit and move to Main Board in 2015,” it said.
It said IFCA's higher-than-expected 3Q14 profit was mainly due to its strong top line growth, coming from domestic and the China business.
Year-to-date, only RM8.4mil Goods and Services Tax (GST) jobs were completed while the research house is targeting 80%-90% revenue growth from the China market this year.
“The company only has 100 customers in China and we understand there are 40,000 property companies in that country. High operating leverage business
“IFCA’s software business has a high operating leverage. Most of its operating costs is fixed (labour is 65% of its operating costs) and its top line has reached the sweet spot this year,” said the research house.
CIMB Research said IFCA’s revenue is now more than sufficient to cover its operating costs and as such, most of the revenue incremental growth should follow directly to the bottom line. This is shown by 3Q14’s EBITDA margin which was at 37.4% compared to 18.0% in 2Q14.
“The 3Q revenue was up 40% on-quarter at RM25.7mil. IFCA is a net cash company, RM34.9mil or 7.7 sen net cash/share as at end-September.
“With limited capex spending and R&D at only RM4mil to RM6mil annually, the company’s cash pile will continue to grow in time. In addition, by next year, we more of the warrants would be converted (143.3 million outstanding warrants, exercise price 10 sen and expires in February 2016) and this could raise additional RM14.3mil for the company,” said the research house.
http://www.thestar.com.my
