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Singapore Investment


 Is the time ripe for  DSONIC 5216 DATASONIC GROUP BERHAD to fly?

Datasonic Group Bhd has been inching up in the past month, gaining 4.7% to close at 45 sen on June 2.

The counter is moving in a positive trend following some good news.

It recently received a contract extension from the Home Ministry for an additional contract value of RM9.94 million.

This is for the comprehensive maintenance services of card personalisation centres at the National Registration Department for six months commencing from June 1 to November 30.

The original contract was valued at RM39.75 million and together with this extension, the total contract value is now worth some RM50 million.

As of March 31, 2023, its order book stood at RM339 million.

This should provide some relief to investors as the counter has been hovering at its 52-week low of 41 sen.

Over the past year, Datasonic has lost some 22.4% in terms of share price.

With the job extension news plus the company’s impressive results, it could be the catalysts needed for the share price to trend higher.

For the financial year ended March 31, 2023, its net profit surged more than sevenfold to RM76.37 million from RM10.24 million a year ago.

The company achieved its highest annual revenue ever at RM344.71 million, up from RM136.43 million previously, driven by higher supply of passports, smart cards and personalisation services.

In 4QFY2023, the security-related integrated ICT solutions provider saw its net profit jump 69.8% to RM22.7 million from RM13.37 million a year ago.

This was on the back of almost doubliing of revenue from RM54.34 million to RM104.9 million.

Datasonic declared a fourth interim dividend of 0.75 sen per share, bringing the total dividend per share for FY2023 to 2 sen, translating into a dividend payout ratio of 74.2%.

Naturally, the company expects the demand for passports to continue to be strong following the reopening of international borders.

Datasonic is also excited about the potential orders of MyKad to rebound to pre-Covid-19 levels.

Similarly RHB Research is positive on the counter as it maintained its buy call with a slightly higher target price of 57 sen from 56 sen previously.

The research house foresees a 35% upside and 5% yield in FY24.

It explained that the resumption of MyKad and consumables supply, coupled with strong demand for passport-related solutions propelled Datasonic’s core earnings to a multi-year high.

RHB Research highlighted that effective supply chain planning and execution allowed the company to ensure sufficient supplies meeting the demand for the national security documents during the quarter.

The research house added that the company’s ability to secure any contract extension on its existing solutions should lift the current share-price overhang.

With the strong push for Datasonic share price in the near term, investors may want to jump in before it is too late.


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