IFCAMSC (0023) - IFCA MSC - Record year for the company
Target RM1.48 (Stock Rating: ADD)
At 97% of our FY14 forecast, IFCA’s 12MFY14 core net profit was in line with our expectations. The company declared a dividend payout ratio of 20%, which was a positive surprise. We keep our EPS forecasts and introduce our FY17 numbers. Our target price remains unchanged, based on 21x 2016 P/E (in line with domestic peers). The stock remains an Add. Potential catalysts include transfer to the Main Board and higher-than-expected China sales.
2014 is a record year for the company
IFCA’s 12MFY14 revenue was up 72% yoy, supported by topline growth in the domestic and China markets. FY14 net profit rose by an amazing 1,072%, an indication that the company finally hit its sweet spot in 2014. IFCA also declared its first ever final 1 sen DPS or 23% dividend payout ratio, in line with our expectations. The company just declared a dividend payout ratio of 20%. We believe that the dividend declared is an indication of the company’s strong operational cashflows and balance sheet. Net cash as at end-Dec was RM49m or RM0.11 net cash per share. Assuming all warrant holders convert their warrants by 2016, this would boost its net cash by an additional RM14m. The fully-diluted issued share base comprises in total 593.4m shares.
China and Malaysia continue to offer growth
In 2015, IFCA’s earnings will be driven by three factors: 1) GST software upgrades. We estimate total domestic GST upgrades to be around RM50m, of which only RM15m work completed in 2014, 2) migration to mobile-based platform. Most of its customers are still on the Windows-based platform and we expect its customers to gradually move to the mobile platform over the next 5-7 years, and 3) China sales should continue to be strong in 2015. We estimate 2014 sales growth at 80% and this year should be at least 60%. IFCA’s market share in the property software solutions in China is still very small. It only has 100 over customers and we understand that there are 46,000 property companies in China. IFCA is opening 8-10 new offices in China in 2015.
Main Board in 2015?
In view of the record FY14 net profit, IFCA’s 3-year cumulative net profit is above RM20m, which is one of the conditions for a transfer to the Main Board. If all goes well, the company should be transferred to the Main Board by mid-2015.
Source: CIMB Daybreak - 18 February 2015
Target RM1.48 (Stock Rating: ADD)
At 97% of our FY14 forecast, IFCA’s 12MFY14 core net profit was in line with our expectations. The company declared a dividend payout ratio of 20%, which was a positive surprise. We keep our EPS forecasts and introduce our FY17 numbers. Our target price remains unchanged, based on 21x 2016 P/E (in line with domestic peers). The stock remains an Add. Potential catalysts include transfer to the Main Board and higher-than-expected China sales.
2014 is a record year for the company
IFCA’s 12MFY14 revenue was up 72% yoy, supported by topline growth in the domestic and China markets. FY14 net profit rose by an amazing 1,072%, an indication that the company finally hit its sweet spot in 2014. IFCA also declared its first ever final 1 sen DPS or 23% dividend payout ratio, in line with our expectations. The company just declared a dividend payout ratio of 20%. We believe that the dividend declared is an indication of the company’s strong operational cashflows and balance sheet. Net cash as at end-Dec was RM49m or RM0.11 net cash per share. Assuming all warrant holders convert their warrants by 2016, this would boost its net cash by an additional RM14m. The fully-diluted issued share base comprises in total 593.4m shares.
China and Malaysia continue to offer growth
In 2015, IFCA’s earnings will be driven by three factors: 1) GST software upgrades. We estimate total domestic GST upgrades to be around RM50m, of which only RM15m work completed in 2014, 2) migration to mobile-based platform. Most of its customers are still on the Windows-based platform and we expect its customers to gradually move to the mobile platform over the next 5-7 years, and 3) China sales should continue to be strong in 2015. We estimate 2014 sales growth at 80% and this year should be at least 60%. IFCA’s market share in the property software solutions in China is still very small. It only has 100 over customers and we understand that there are 46,000 property companies in China. IFCA is opening 8-10 new offices in China in 2015.
Main Board in 2015?
In view of the record FY14 net profit, IFCA’s 3-year cumulative net profit is above RM20m, which is one of the conditions for a transfer to the Main Board. If all goes well, the company should be transferred to the Main Board by mid-2015.
Source: CIMB Daybreak - 18 February 2015
