KUALA LUMPUR (June 3): Datasonic Group Bhd’s share price rose on Bursa Malaysia in brisk trading this morning — after the group yesterday said it had been awarded a contract worth RM39.75 million to provide maintenance services for card personalisation centres of the National Registration Department.
Shares in Datasonic, listed as one of the top 30 most active counters today, were up as much as 4.85% or 2.5 sen to 54 sen. It had pared some gains at 52.5 sen at 11am, still up 1.94% or one sen, giving it a market capitalisation of RM1.56 billion, with 22.13 million shares traded.
Yesterday, Datasonic said it had accepted the letter of award (LoA) from the Ministry of Home Affairs (KDN) for the contract. The contract is for a period of 24 months from June 1, 2021 to May 31, 2023.
Under the terms of the LoA, Datasonic is required to implement the Professional Training and Education For Growing Entrepreneurs (PROTÉGÉ) programme as set by the government based on the contract sum with a minimum number of participants of 15 persons at no cost to the government.
Datasonic also needs to furnish a performance bond for the amount of RM993,750 to KDN, with the validity period commencing from June 1, 2021 to May 31, 2024.
Research house 'neutral' on contract win
RHB Research is “neutral” on the contract win given that it is within the research house's forecasts.
“As the contract extension is within our assumptions, we make no changes to our forecasts and target price (TP) of 57 sen based on unchanged 25 times financial year ending March 31, 2022 (FY22) price-earnings (P/E),” said RHB Research.
It added that the contract win is yet another extension (June 1, 2021 to May 31, 2023) secured via an open tender, demonstrating its proven track record and established technical capabilities of the incumbent.
“We understand the group is still in talks with the government on securing the renewal or replacement of MyKads, in addition to vying for projects such as foreigner identity card or i-Kad solutions, digital MyKads, the MyKad printing system, National Digital ID or e-KYC (Electronic Know-Your-Customer) and electronic medical records. Any contract wins could further boost the order book and sentiment on the stock,” it further added.
The research house maintained its “buy” recommendation on the stock on expectations of a remarkable earnings recovery in anticipation of a V-shaped earnings recovery on pent-up demand for passports upon the roll-out of vaccines and eventual relaxation of international borders — with this supported by a RM450 million outstanding order book.