Datasonic Group Bhd
(June 8, RM1.11)
Not rated with target price of RM1.41: Datasonic’s business revolves around the provision of total information and communications technology (ICT) solutions. 

Datasonic is the only ICT vendor involved in three major smartcard programmes in Malaysia — government multi-purpose cards ([GMPC] national identity card [ID], MyKad), payment multi-purpose cards (PMPC) and Europay, MasterCard and Visa Card migration — in the country. 

The company is also the technology provider and exclusive sole contractor of Dibena Enterprise Sdn Bhd which has been involved in the GMPC national ID (MyKad, MyPR and MyKid) project since 1999.

The group has constantly incorporated the latest cutting-edge technologies into its products and services offering. Such technologies are usually obtained through its strategic business model with prominent international business partners globally. This reduces the lead time required to come up with new product offerings.

Bank Negara Malaysia (BNM) in its financial stability and payment systems report 2013 highlighted that “measures will continue to be taken to further enhance the security of e-payment transactions and educate consumers on safe e-payment practice”. 

One of the steps included the migration from current signature-based credit cards to chip and pin-based. Based on this requirement, it is expected that there are more than 10 million cards to be migrated from July 2015 to December 2016.

BNM has mandated that all banks must migrate the current usage of PMPC and/or automated teller machine cards to Malaysian chip card solutions starting from the second quarter of 2015. It is expected that more than 30 million cards will be replaced in the market by Dec 31, 2017.

We view that Datasonic will be one of the main beneficiaries of contract works for this migration exercise as it is one of the main credit and debit card vendors in the country. 

At present, Datasonic’s clients for the credit and/or debit card business include Citibank Bhd, RHB Bank Bhd, Hong Leong Bank Bhd, United Overseas Bank (M) Bhd, Affin Bank Bhd and Al Rajhi Bank. 

In addition, the group has recently moved its credit card processing factory to larger premises to accommodate the additional processing requirements. 

Under the 11th Malaysia Plan (11MP), the government is looking at strengthening the infrastructure for smart cities. One of the initiatives includes the availability of video crime monitoring services. 

This could involve the usage of high-definition closed-circuit television (CCTV) cameras. Should the government proceed with these initiatives, we view that Datasonic could be a front runner as it has completed a project in Penang with similar scope of works. 

To recap, Datasonic was awarded the contract to supply and install CCTV cameras on Penang Island and in Seberang Perai by the Penang Municipal Council and Seberang Perai Municipal Council respectively in 2013 and 2014. Datasonic has installed more than 350 CCTV cameras on Penang Island and in Seberang Perai. — MIDF Amanah Research, June 8

This article first appeared in The Edge Financial Daily, on June 9, 2015.