Info-Tech Systems Ltd

Rating BUY as : at 29 August 2025
Last Close : SGD 0.860
Fair Value : SGD 1.00

Debit cloud revolution, credit HR meets cutting-edge technology

• Quality provider of cloud-based software-as-aservice (SaaS) human resource management software (HRMS) with a strategic focus on small and medium enterprises (SMEs)
• Accessible price points, as well as comprehensive after-sales service and customer support allow the company to differentiate itself from its competitors amidst a global movement toward SaaS offerings
• Initiate coverage with a BUY rating and a fair value (FV) estimate of SGD1.00

Investment thesis

Headquartered in Singapore, Info-Tech Systems Ltd (ITL) is a leading provider of cloud-based HRMS designed for SMEs in Singapore, Malaysia, Hong Kong, and India. The company primarily offers two product lines, namely cloud-based HRMS and Info-Tech Accounting Software. ITL’s HRMS specifically targets the fast-growing SME segment, addressing bottlenecks in digital adoption through its all-in-one software solutions. These are scalable, allowing ITL to expand alongside SME customers’ fast-growing businesses, and offered at an accessible price point, which can be particularly attractive to cost-sensitive SMEs that are just embarking on their digitalisation journeys and are first-time users of HRMS. ITL also prides itself on its comprehensive aftersales service and customer support. We think these customer-centric features allow it to differentiate from its competitors, positioning it well to benefit from a global movement towards SaaS offerings amidst policy support to transition towards digital economies.

Investment summary

• Favourable secular growth trends – According to Converging Knowledge, the SME market for cloudbased SaaS HRMS and Accounting Software for Singapore, Malaysia, Hong Kong, and India combined was estimated at USD3.3b in 2024, which is 100 times of ITL’s FY24 revenue. These geographies are also expected to grow at compound annual growth rates (CAGR) of 11.9%, 9.2%, 10.0%, and 7.2%, respectively, from 2025 to 2029, underscoring ITL’s significant runway for growth. Given its focus on customer centricity, we think ITL is well -positioned to benefit from secular growth trends such as a global movement towards SaaS offerings (amidst growing digital transformation efforts across various industries and increasing policy support for digitalisation); rising strategic importance of human resource (HR) and finance departments; and a growing need for companies to stay compliant and mitigate regulatory risks, even as they continue to drive operational efficiency.
• Sequential improvements in 1H25 results - ITL’s 1H25 revenue grew 4.7% year -on -year (YoY) to SGD22.4m, led by faster growth from overseas markets. This was underpinned by a 15% and 28% growth in the number of HRMS users and Accounting customers respectively since the end of FY24. The company was also able to improve its gross customer retention rate by another 3 percentage points (ppt) to 94% over the period. Higher labour costs due to an increase in research and development (R&D) headcount were offset by lower selling and distribution (S&D) costs and tax expense, resulting in a 9% YoY increase in adjusted net profit to SGD7.2m. ITL declared an interim dividend of 1.55 Singapore cents per share, in line with its commitment to a payout ratio of not less than 50% of its net profit after tax for FY25 and FY26. Management is guiding for stronger growth in 2H25, driven by intensified marketing efforts as the company continues to focus marketing spend on initiatives with higher returns on investment (ROI).
• Initiate coverage with FV estimate of SGD1.00 – To value the company, we apply a target price -to - earnings (P/E) multiple of 16x to our forecasted FY26 earnings per share (EPS) of 6.4 Singapore 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 ITL’s focus on Asia and relatively smaller market capitalisation versus some of its peers, and notwithstanding its industry -leading profit margins. We see deeper penetration of existing markets and the launch of new products as key near - term growth catalysts. Downside risks include a sudden intensification of competition given the fragmented market landscape that ITL operates in, as well as deteriorating macroeconomic conditions which may impact SMEs disproportionately and increase credit risk for the company.

Price performance chart

Source: Bloomberg, Internal estimates

Potential catalysts

• Higher than expected growth in number of customers and/or stronger than expected pricing power
• Expansion of solutions suite in line with customers’ needs, spurring new customer wins or improving customer stickiness
• Entry into a new geographic market and/or accretive acquisitions or partnerships

Investment risks

• Failure to retain existing customers due to inability to respond to changing customer preferences or deteriorating macroeconomic conditions
• Data security and/or cloud computing infrastructure downtime could impact operations and result in regulatory fines
• Failure of expansion plans into new geographies and/or product lines

Info-Tech Systems Ltd: Award-Winning HRMS Provider

Headquartered in Singapore, ITL is a leading provider of cloud-based HRMS designed for SMEs in Singapore, Malaysia, Hong Kong, and India. The company primarily offers two product lines, namely cloud-based HRMS and Info-Tech Accounting Software. These are deployed via a SaaS model that generates high levels of recurring subscription revenues. It also offers complementary services such as access control and data collection hardware systems, as well as payroll outsourcing services. Its latest products and services include the Academy and Jobs Lah, and the company envisions expanding its solutions suite to include, amongst others, Customer Relationship Management (CRM) and Point of Sales (POS) systems.

Product offerings

ITL’s HRMS (78.7% of FY24 revenue) was launched in 2016 and consists of nine modules which are essential to the HR function of its clients. It is designed to be simple and easy to use to minimise software and hardware integration complications, and to reduce the complexity of training to be provided to customers. Customers have the option of subscribing to a tailored suite of HRMS modules and related services to suit their HR requirements, with the flexibility to seamlessly add modules as their needs change. ITL has also launched a simplified version of its HRMS branded as DigiSME in Singapore and Malaysia, which is targeted at micro-SMEs that do not require the full suite of ITL’s HRMS modules during the early stages of their growth. In 1H25, ITL managed to grow its number of HRMS users by 15% to 906k users.

ITL’s Info-Tech Accounting Software (4.0% of FY24 revenue) is meant to complement HRMS, providing customers with a real-time picture of their financial situation. Its features include bank reconciliation, inventory management, quotations, billing, invoicing, accounts receivable, accounts payable, GST/SST, financial report, and management of expense claims – and these are seamlessly integrated with HRMS. The platform is also integrated with various third-party business tools and sources (e.g. bank feeds) which allows direct entry of data into the system. This saves significant time and moves customers into real-time accounting. The platform is localised to each jurisdiction in which the company operates and is fully customisable and scalable. Although Info-Tech Accounting Software was only launched in 2022, it has generated a healthy

base of customers and is currently used by over 1,400 organisations across multiple industries in Singapore, Malaysia, and Hong Kong.

Separately, ITL also sells access control and data collection hardware systems, including RFID card readers, biometric fingerprint readers, and facial recognition systems. Its hardware systems are seamlessly integrated and can be synced in real time with HRMS. Since 2022, ITL has been handling payroll processing and related services for over 100 companies, from calculating employee salary to filing tax returns. The service encourages businesses which outsource their payroll services to ITL to eventually take up the company’s HRMS and payroll module if they decide to bring payroll operations in-house, as the company offers a seamless transition.

ITL launched in 2023 its Academy for Singapore Workforce Skills Qualifications (WSQ) training courses and its artificial intelligence (AI) driven jobs portal, Jobs Lah. Year-to-date (YTD), ITL has introduced five additional courses on its Academy, bringing the total number of courses to 12. This has supported an increase in the number of registrations by ~1,200 to more than 4,000 by the end of 1H25. Based on the company’s initial public offering (IPO) prospectus, Jobs Lah had a database size of over 80,000 jobs seekers and over 5,000 employers in Singapore and Malaysia, which serves as a database of contacts for potential cross-selling opportunities.

Finally, a subscription-based business model means the majority of customers pay upfront for a subscription period, resulting in a significant portion of deferred revenue being recorded as a contract liability. Coupled with low inventory needs, this results in strong cash flow generation and a highly efficient cash conversion cycle. The cash generative nature of ITL’s business enables it to fund its operations and growth initiatives without relying heavily on external financing, underscoring its strong financial position and ability to sustainably manage short-term obligations.

4) Policy support provides an impetus for SMEs to adopt ITL’s offerings

Digitalisation incentives to promote the adoption of enterprise productivity solutions can create an environment that encourages the use of ITL’s solutions to enhance business operations. These incentives will encourage SMEs to adopt such solutions as they further reduce upfront costs. For example, in Singapore, there are various grants by the Singapore government for SMEs, including subsidies for up to 50% of first-year costs (subject to an annual cap of SGD30,000), when SMEs take up pre-approved packages for ITL’s HRMS and Info-Tech Accounting Software. Singapore also has policies in place to encourage lifelong learning and workplace transformation, which benefits training academies focused on workforce upskilling.

In Malaysia, the Smart Automation Grant (SAG) aims to encourage SMEs and mid-tier companies, particularly local manufacturers and service providers, to adopt automation. Eligible firms are able to receive a one-forone grant on eligible expenditures (including automation software), up to a cap of MYR1m. Other policy support such as the Malaysia Digital Economy Blueprint (MyDigital) may also provide additional impetus for companies to adopt cloud-based/SaaS solutions.

Given ITL’s leading position in Singapore and strong growth in Malaysia, the company also anticipates that it might benefit from the upcoming JS-SEZ. According to Converging Knowledge, the JS-SEZ is projected to generate approximately 20,000 skilled jobs in both Singapore and Malaysia. For companies expanding their operations beyond Singapore and vice versa, the implementation of cloud-based SaaS HRMS and Accounting Software solutions would provide simplify (financial) data transfer and consolidation across crossborder operations. Therefore, opportunities would likely abound for cloud-based SaaS HRMS and accounting software vendors, especially those with ready and tried-and-tested products like ITL.

5) Clear growth strategies to drive expansion and retention of customers

ITL has laid out five growth strategies to drive continued expansion of its business. In the near term, the company’s strategic priority is to focus on deepening its penetration of existing markets, growing its existing playbook of offerings to provide a more comprehensive end-to-end solution, and harnessing synergies across its platforms.

Valuation

We are forecasting YoY revenue growth of 11.5% and 9.9% in FY25E and FY26E, respectively. Malaysia is expected to be the fastest growing market, followed by Hong Kong/India (Others) in FY25E, and finally Singapore given that it is the most mature market for ITL. In terms of product lines, we expect Info-Tech Accounting Software revenues to grow at a faster pace than HRMS in FY25E given that it is a relatively newer product offering for the company. On the bottom line, we are forecasting profit after tax (PAT) growth of just 4.9% YoY in FY25E. The 1.7 ppt compression in PAT margin from 28.2% in FY24 to 26.5% in FY25E is driven by one-off listing and relocation expenses of SGD2.1m incurred in 1H25. Adjusted PAT would have grown 19.4% YoY. PAT growth is expected to recover to 26.7% in FY26E, translating to an expansion of margins to 30.6%. We note that management has committed to a payout ratio of not less than 50% of its net profit after tax (excluding exceptional items) for the period from its listing date to 31 Dec 2025 and for FY26.

To value the company, we apply a target P/E multiple of 16x to our forecasted FY26 EPS of 6.4 Singapore cents. Our target P/E multiple is derived from applying a 20% discount to the average P/E of ITL’s peers (see Exhibit 21), taking into account ITL’s focus on Asia/Emerging Markets (EM) and its relatively smaller market capitalisation versus some of its peers, notwithstanding its superior profitability. As such, we initiate coverage on ITL with a BUY rating and a FV estimate of SGD1.00.

Exhibit 21: Peer comparison table