In her Aug 29 report, Lim adds that these geographies are expected to grow at compound annual growth rates (CAGR) of 11.9%, 9.2%, 10% and 7.2% from FY2025 to FY2029, which means there is “significant runway for growth” for the company.
For its 1HFY2025 results, Lim notes improvements, including Info-Tech’s revenue, which grew by 4.7% y-o-y to $22.4 million due to faster growth from its overseas markets. The increase was underpinned by a 15% growth in the number of human resource management software users and a 28% increase in accounting customers since the end of FY2024. Info-Tech’s gross customer retention rate also improved by 3 percentage points to 94% in the six months.
Overall, the group reported an adjusted net profit of $7.2 million for the 1HFY2025, 9% higher y-o-y, as higher labour costs from an increase in research and development (R&D) headcount were offset by lower selling and distribution costs and tax expense.
In 2HFY2025, Info-Tech’s management believes it will see higher growth as the company continues to focus its marketing spend on initiatives with higher returns on investment (ROI), says Lim.
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The analyst has also initiated a target price estimate of $1, which represents a P/E multiple of 16 times to her forecasted FY2026 earnings per share (EPS) of 6.4 cents.
“ Our target P/E multiple is derived from applying a 20% discount to the average P/E of the company’s peers, taking into account Info-Tech’s focus on Asia and relatively smaller market capitalisation versus some of its peers and notwithstanding its industry-leading profit margins,” says Lim.
In her view, key near-term growth catalysts include a “deeper penetration of existing markets and the launch of new products”, while downside risks include a “sudden intensification of competition” due to the fragmented market landscape the company is operating in. Deteriorating macroeconomic conditions, which may impact SMEs and increase Info-Tech’s credit risk, are another negative.
In FY2025, Lim has forecast the company to report revenue of $53.6 million with a profit after tax of $16.5 million.
With Info-Tech’s last-closed price of 86 cents on Aug 28, the company’s dividend yield is at 4.1% based on Lim’s FY2025 estimates.
As at 3.55pm, shares in Info-Tech are trading 1 cent higher or 1.16% up at 87 cents.
