• DSONIC has secured a contract from the Ministry of Home Affairs to design, print, supply, and deliver 38 types of security documents worth RM22.5m for 3 years.
• DSONIC has successfully seized new contract from the previous vendor, Percetakan Keselamatan Nasional (PKN). We believe DSONIC’s competitive value advantage by offering high quality documents, enhanced security features while offering lower price, are the main factors inwinning the project.
• We raised our FY23-25F earnings forecast by 3-4% after imputing the 3-year contract contribution to the company.
• Reiterate our BUY recommendation on DSONIC with higher TP of RM1.09 (from RM1.05), pegging 37x PER on FY23 EPS of 3.0 sen.

DSONIC won a 3-year contract worth RM22.5m from MHA

Datasonic (DSONIC) announced that it has received a letter of award (LoA) from the Ministry of Home Affairs (MHA) to design, print, supply, and deliver various security documents to National Registration Department (NRD) of Malaysia for 3-year (1 May 2022 – 30 Apr 2022) for a contract amount of RM22.5m.

According to the management, the contract will have 38 types of security documents which among others include birth certificates for citizenship and non-citizenship, adoption certificates, marriage certificates, death certificates, etc. For the 3-year project, DSONIC will deliver 11m security documents with prices ranging from RM2.50 to RM4.00 per document.

Successfully taken over new contract from previous vendor

DSONIC has successfully seized the first project for the company in supplying various security documents to NRD from the previous vendor, Percetakan Keselamatan Negara (PKN) after 10 years of delivering the services. Management guided the documents will be better in terms of security as DSONIC will embed the documents with its special security ultraviolet (UV) features while offering them at lower price. Subsequently, this would provide cost-saving to the government while maintaining high level of security.

Reiterate BUY at higher TP of RM1.09 (from RM1.05)

We raise our FY23-FY25F earnings forecast by 4%/4%/3% after imputing a 3-year contribution of the new contract to the company. Hence, we have derived a higher TP of RM1.09 (from RM1.05), pegged at 37x PER to its FY23F EPS of 3.0 sen and reiterate our BUY recommendation on the stock.

Source: BIMB Securities Research - 25 Mar 2022