• Datasonic Group Bhd (Dsonic) has secured five Letters of Extension (LOEs) from the Ministry of Home Affairs (MOHA), with a total value of RM182mn.

• These extensions include: i) supply of MyKad, MyTentera, MyPOCA raw cards and consumables, ii) amendments to the contract for comprehensive maintenance services of card personalisation centres, iii) supply of Malaysian Passport Chips, iv) supply of Malaysian Passport Documents, and v) supply of Polycarbonate Biodata Pages.

• We view these developments positively as they highlight Dsonic's expertise and capability, reinforcing its position as the sole provider for passport solutions and MyKad.

• We make no changes to our earnings as these extensions were already factored into our valuation. We maintain our BUY recommendation on Dsonic with a target price of RM0.595, based on 17x PER pegged to FY25F EPS of 3.5sen.

Exclusive Provider Status Reinforced

The Ministry of Home Affairs (MOHA) has granted multiple contracts to Datasonic Group Berhad (Dsonic) with cumulative additional ceiling contract value of RM182mn. These contracts encompassed (i) three Letter of Extensions (LOEs) totalling RM142.28mn for the Malaysian Immigration Department (MID) to supply passport chips, documents, and polycarbonate biodata pages, (ii) an LOE worth RM11.57mn for the maintenance services of card personalization centres at the National Registration Department (NRD), and (iii) an LOE valued at RM27.81mn for the supply of MyKad, MyTentera, MyPOCA raw cards, and consumables. These contracts extend for an additional six months, commencing from 1st June 2024 to 30th November 2024, affirming Dsonic’s outstanding performance as the exclusive provider of passport solutions and MyKad.

Earnings Impact on Datasonic

These contracts will boost Dsonic’s orderbook to over RM300mn. However, since we had anticipated these extensions in our previous company update report dated 20th May, our earnings forecast remains unchanged. We attribute the renewal of these contracts to Dsonics’s excellent service delivery, which has consistently met the government’s expectations. We maintain our BUY rating with an unchanged Target Price of RM0.595.

Source: BIMB Securities Research - 5 Jun 2024