Better prospects for Datasonic on new scope of work


  • Corporate News
  • Tuesday, 04 Feb 2020

“Next in the line would be the Foreign Visa System, which is expected in February, and the National Integrated Immigration System, in which the tender period will close on March 4, ” RHB Research added.

PETALING JAYA: The prospects of Datasonic Group Bhd, which saw a change at the helm last Friday, are expected to improve after securing a new scope of work under an existing passport-chip supply contract with the government.

According to RHB Research, the change of scope for the supply of passport chip contract as announced last week would be a win-win solution for Datasonic and the government, as it would elevate Datasonic’s earnings while the government would be able to generate savings by recalibrating the quantity of chip supply and leaving the total contract sum unchanged.

“Following the additional scope of work, Datasonic is now the integrated service provider for the Home Affairs Ministry (KDN) in high-security immigration-related solutions, which include passport chips and booklet, polycarbonate data page, public key infrastructure, public key directory, and auto-gate maintenance, ” RHB Research said in report.

“We believe with a higher barrier of entry on solutions related to national security, the company stands a good chance of clinching a new contract to supply auto-gate solutions at the Sultan Iskandar Building in Johor.

“Next in the line would be the Foreign Visa System, which is expected in February, and the National Integrated Immigration System, in which the tender period will close on March 4, ” it added.

The brokerage has maintained its “buy” call on Datasonic, with an unchanged target price of RM1.96 based on 39 times the estimated earnings for the financial year ending March 31,2021.

“We believe multiple contract extensions and Datasonic’s proven track record continue to underline management’s capabilities in securing new contract wins, ” RHB Research said.

Datasonic last Friday announced that KDN had sought to change the scope of a RM318.75mil contract awarded to the company in December 2015 for the supply of 12.5 million passport chips expiring on Nov 30,2021.

Under the change, there would be additional scope of work, including maintenance services for hardware and software of auto gate and chips, equipment and application of public key infrastructure and public key directory at a value of RM38.25mil. Concurrently, KDN would reduce the quantity of passport chips to 11 million amounting to RM38.25mil, leaving the total contract sum unchanged at RM318.75mil.

“We believe the agreed new scope of work under the existing passport-chip supply contract is favourable to both the government and Datasonic.

“Instead of going through a long process and commit to an additional contract to these works, the government is able to generate savings by recalibrating the quantity of chip supply based on the current burn rate of around two million per annum and outstanding quantity of 6.3 million units, ” RHB Research said.

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