Infomina (INFOM MK)
Investment Highlights
Infomina looks to be on a decline, but the story beneath is far steadier than headline numbers suggest. Stripping out oneoffs, its core renewal business remains sticky and recurring, keeping it a key proxy to regional mainframe spend. The big swing comes in FY27F, where contract renewals and a push into Japan could drive record profits (+32% YoY) and spark a PE rerating. Beyond this, new AI ventures open fresh lanes of growth outside financial services and government clients. We reassume coverage with a BUY (from HOLD) and TP RM1.70/share, a 25% upside catalyst waiting for recognition.
- Reassume coverage with BUY (from HOLD) and TP of RM1.70. This is following a change in analyst coverage. Our TP is derived from a target PE of 24.0x and FY27F EPS, to capture a 12-month forward view. The target PE represents the group’s 5-year average. We expect the stock to rerate upwards back to its mean, on the back of expectations of record earnings and upside potential from its new data & AI ventures.
- Sticky and recurring business. Its higher margin renewal business has compounded at a FY20-25 revenue CAGR of +36% YoY. Mainframes may sound old school, but are mission critical for financial services and government agencies. These systems run core functions like payments, ledgers, ID databases and track records, workloads that demand reliability, security and processing power. When embedded, mainframes are costly and risky to detach, making clients stick to long term service and renewal contracts.
- FY27F shaping up to be breakout year. We forecast earnings to surge +32% YoY to a record RM43mil, fuelled by two major contract renewals (~35% of its renewal base) and a fast-moving expansion into Japan. Renewal fees typically step up ~5% annually, providing a built-in earnings lift. In Japan, momentum is clear, where 10 customers have onboarded out of a 40+ pool, already delivering RM6mil in FY25 revenues. We estimate Japan to contribute 8% of FY26F and 14% of FY27F revenues, cementing its role as the group’s near term growth engine.
- Upside optionality from new AI ventures. Its push into AI and data analytics marks a natural extension beyond its mainframe core, opening a pathway to higher-value recurring revenues. Through its AI-powered portal, the group enables clients to draw predictive insights across credit risk, collections, fraud detection and cybersecurity, while its self-build modelling tools allow businesses to customise solutions to their needs. A recent announced partnership with Geolytik further strengthens this ambition. ValuationXchange digitises the valuation process, linking banks to panel valuers, automating workflows and curbing manipulation. This helps banks reduce credit risk, accelerates loan approvals and strengthengs compliance.
