Growing sentiment in Datasonic to continue

KUALA LUMPUR: RHB research expects the improvement in sentiment over Datasonic Bhd to continue with an expected recovery in FY20.

According to the research house, Datasonic has seen a return in investor interest after obtaining a constract extension for providing preventive maintenance services on card personalisation centres at the National Registration Department (NRD).

"The extension was awarded by the Home Affairs Ministry for two years (1 Jun 2019 to 31 May 2021) and is valued at MYR28.79m (or MYR14.39m pa). 

"The fact that it secured a contract extension demonstrates its competence in providing such services to the Government," said RHB.

The group's share price has risen 46.6% since early June.

Datasonic's total outstanding orberbook now stands at RM772mil which is expected to anchor its earnings recovery in FY20, said RHB.

The resumption of MyKad orders in 4QFY19 should also continue in the upcoming quarter as the NRD's investory level is currently low at two million pieces.

Meanwhile, more announcements on government-related solutions contracts are expected over the next one to two months. 

"As such, its orderbook may improve further with potential job wins such as Public Key Directory- (PKD) and Public Key Infrastructure (PKI)-related solutions. 

"Management remains optimistic on the upcoming government-related project bids or requests-for proposal related to foreign workers, immigration system upgrades, e-visas as well as the facial recognition system," said RHB

The research house maintained its buy call on Datasonic with a higher target price of 77 sen from 65 sen previously.