Coupled with its cash hoard before the initial public offering (IPO), Kande and Tan note that the company, with $60 million in cash, is well-positioned to expand into new markets such as Malaysia and India, where growth potential is higher.
Just a fortnight later, it was Nirgunan Tiruchelvam of Aletheia Capital’s turn to initiate coverage, with his “buy” call and even more bullish target price of $1.17.
In his Aug 29 note, he praised the company for its “resilient” Software-as-a-Service (SaaS) framework, which supports high client retention and strong operating efficiency. “Government support programmes, such as Singapore’s PSG or Productivity Solutions Grant, improve onboarding economics by lowering customer acquisition costs. With recognised certifications (ISO and MTCS) and a unique product range, Info-Tech is well-positioned to expand into multiple markets in Asean,” writes Tiruchelvam.
He expects the company’s annual recurring revenue to grow at 25% per year at a 6.2% CAGR from FY2025 to FY2028 and to generate $18 million in ebitda in FY2025 ending Dec 31. In 1HFY2025, Info-Tech reported earnings of $5.16 million, down 21% y-o-y, and adjusted net profit of $7.2 million for 1HFY2025, 9% higher y-o-y.
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The company offers built-in compliance features that can help drive strong retention, extract operating leverage and be poised to capture Southeast Asia’s SME digitalisation wave. “There is a US$17.3 billion addressable market in HR and finance digitisation. Info-Tech is on the cusp of sustained earnings growth,” says Tiruchelvam.
Already, Info-Tech is scaling its geographic footprint across Malaysia, Hong Kong and India to capture SME-driven growth in digital transformation. In Malaysia, onboarding is propelled by SME Digitalisation Grants. In Hong Kong, RegTech partnerships address cross-border compliance. In India, Info-Tech is engaging state-level fintech alliances to penetrate the fragmented SME landscape.
He expects the company to generate an ebitda margin of over 30% in FY2025 to FY2028. In FY2025, Info-Tech is projected to have a net cash position of $41 million, following its recent IPO, which will provide the foundation for its regional expansion. “Info-Tech appears undervalued according to SaaS metrics like the Rule of 40, as well as comparative metrics,” he adds.
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On the same day, OCBC Investment Research analyst Ada Lim initiated coverage with a “buy” call as well. She likes this stock for its position riding secular growth trends, such as the move towards SaaS offerings, rising focus on human resources and finance departments, as well as growing compliance needs.
Citing research from Converging Knowledge, Lim notes that the SME market for cloud-based SaaS human resource management software and accounting software for Singapore, Malaysia, Hong Kong and India was around US$3.3 billion ($4.24 billion) in 2024, 100 times Info-Tech’s FY2024 revenue, which stood at $43.7 million, suggesting “significant runway for growth”.
Regarding 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 three percentage points to 94% in the six months.
In the current 2HFY2025, Info-Tech expects higher growth as it continues to focus its marketing spend on initiatives with higher returns on investment (ROI), says Lim, whose $1 target price 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”. In contrast, downside risks include the “sudden intensification of competition” due to the fragmented market landscape in which the company operates. Deteriorating macroeconomic conditions, which may impact SMEs and increase Info-Tech’s credit risk, are another negative. For the whole of FY2025, Lim estimates Info-Tech will report revenue of $53.6 million and earnings of $16.5 million.
