• The Ministry of Home Affairs (MOHA) has granted 2 Letters of Extension (LOEs) to Datasonic Group Berhad (Dsonic) for a cumulative value of RM81.2mn.

• These extensions include 12-month contract for the supply of MyKad, MyTentera, MyPOCA raw cards and consumables, as well as contract for comprehensive maintenance services of card personalisation centres.

• We believe these continuous awards underscore Dsonic's exceptional technical expertise and operational reliability, further solidifying its position as the sole provider of MyKad solutions.

• Our earnings projections remain unchanged, as these extensions were already incorporated into our valuation. We reiterate our BUY recommendation on Dsonic, with a target price of RM0.63, based on 17x PER applied to FY25F EPS of 3.7sen.

Longer Extensions, Safeguarding Future Growth

Datasonic Group Berhad (Dsonic) has secured 2 Letters of Extension (LOEs) from the Ministry of Home Affairs (MOHA) amounting to total contract value of RM81.2mn. These contracts encompassed:

1. Supply of MyKad, MyTentera, MyPOCA raw cards, and consumables valued at RM59.8mn; and
2. Maintenance services of card personalization centres at the National Registration Department (NRD) worth RM21.4mn.

These LOEs span 12 months, commencing from 1st December 2024 to 30th November 2025, longer than the previous awarded contracts of 6 months. While we view these extensions as a testament to Dsonic’s strong track record and technical expertise, the absence of the typically concurrent LOE for passports suggests that the government is yet to finalise the contract specifics. Nevertheless, given Dsonic’s established role as the key supplier for passports, we remain confident that the company will secure this project as well, once the details are being concluded.

No Changes to Earnings Forecasts

As these contract extensions were anticipated, our earnings forecast remains unchanged. The renewals reflect Dsonic's strong track record of excellent service delivery, consistently meeting government’s standards. Additionally, the potential for the passport LOE, of which we believe will be announced in due course, high likely to clinch favorably to Dsonic, hence reinforcing our positive view of the company’s sustainable growth trajectory. We maintain our BUY call with an unchanged target price of RM0.63.

Source: BIMB Securities Research - 3 Dec 2024