Infoline may see further gain in share price after migrating to the Main Market

Infoline Tec Group Bhd share price may continue to rise following 4.1% gain to close at RM1.01 on Nov 21, after rising from a low of 79 sen on Aug 29. Investors are positive on the prospects of the IT infrastructure and cybersecurity service provider after it posted its highest quarterly earnings since its debut on the ACE Market in July 2022.

Infoline reported a 54.6% increase in net profit for the third quarter ended Sept 30, 2024 to RM8.04 million from RM5.2 million a year ago. Revenue for 3QFY24 surged 86.8% to RM30.45 million from RM16.3 million driven by strong contributions from its managed IT services segment and the successful delivery of key IT infrastructure and cybersecurity projects.

For 9MFY2024, Infoline net profit declined 15.3% to RM9.62 million from RM11.35 million amid lower margin and higher costs. This is despite revenue surging 61.1% to RM72.5 million from RM45.01 million. EPS for 9MFY2024 decreased to 2.65 sen from 3.12 sen in 9MFY2023.

Earnings per share (EPS) rose to 2.21 sen in 3QFY24 from 1.43 sen previously but for the nine-month period, EPS fell to 2.65 sen from 3.12 sen. The company also declared an interim single-tier tax-exempt dividend of 0.79 sen per share to be paid on Nov 28.

According to consensus estimates, Infoline is projected to record net earnings of RM13.4 million for FY24 and RM19.3 million for FY25, translating to PERs of 27.4x and 19.0x, respectively.

Another catalyst is the recent approval from the Securities Commission for its transfer of listing to the Main Market. Infoline shares begin trading on the Main Market on Nov 22. This is likely to broaden its investment appeal to a wider range of investors.

Infoline Tec sees potential in rising technology adoption, particularly among large and medium enterprises undergoing digital transformation. This transformation is expected to drive substantial investments in IT infrastructure and cybersecurity. Infoline believes that as reliance on IT infrastructure grows, the demand for its expertise and services will also rise.

The company will also see expanding job flows from India and China, where multinational corporations and key clients are ramping up investments. The standout performance in the Managed IT Services segment is made possible by its dedicated Cyberwatch Centre and the in-house team of experts, which we expect to remain a core differentiator going forward.

Investors should like Infoline for its strong-positioning and innovative solutions, which would help it grow further.