$ITMAX / 5309 (ITMAX SYSTEM BERHAD) -Park the contract

Third Smart Parking Contract Win:
ITMAX secured its third smart parking contract with the Tangkak District Council (MDT) for 5,113 street parking spaces. This contract runs for 15 years, from 1 September 2024 to 31 August 2039.

Revenue Sharing Model:
ITMAX will manage the operations with a 70%-30% revenue-sharing agreement between its subsidiary, Southmax S/B (65% owned by ITMAX), and MDT. ITMAX will be responsible for the system development, management, and maintenance.

Revenue Projections:
HLIB estimates that a 40% utilisation rate could generate approximately RM296k per month (RM3.5m annually). ITMAX’s 70% share, with a 50% margin, could add RM1.2m to the company’s yearly profit. This project marks only the first phase, with potential expansion to over 9-10k parking spaces.

Expansion Opportunities:
ITMAX is expanding beyond Greater Johor Bahru with this contract, following earlier deals with Majlis Bandaraya Iskandar Puteri (MBIP) in June 2024 and Majlis Perbandaran Kulai (MPKu) in July 2024. Johor has around 200,000 parking bays, which could generate up to RM138.2m in annual revenue, potentially adding RM48m to the company’s bottom line.

Analysts’ Optimism:
Both HLIB and Maybank view ITMAX’s momentum in smart parking as a key growth driver. Maybank retains a BUY rating with a target price of MYR4.25, factoring in expected earnings from these contracts.

ESG Improvement:
ITMAX improved its ESG score to 66/100 (up from 41/100), reflecting stronger social and corporate governance measures implemented in FY23. This improvement includes ITMAX’s use of AI-powered CCTV to help solve local criminal cases, which contributed positively to its social utility score.