• DSONIC has secured a contract from Pertubuhan Keselamatan Sosial (PERKESO) to develop the Data Analytics Hub for Employment Insurance System for a period of 5 years(1 July 2022 – 30 June 2027) for a contract valued at RM9.7m.

• We are positive on the announcement as we believe the award would provide a greater visibility for DSONIC to win more software development projects from government agencies in the future.

• We raised our FY23-25F revenue to reflect the contribution of the project while revisiting our depreciation, net finance cost, and taxation assumption following our lower-than-expected figures for 12MFY22. As a results, DSONIC’s 12MFY22’s core profit only made up 77% of our full year estimates.

• Maintain our BUY recommendation on DSONIC at a new TP of RM1.06 (from RM1.09), pegging 37x PER to FY23 EPS of 2.9 sen.

DSONIC wins a 5-year contract worth RM9.7m from PERKESO

Datasonic (DSONIC) announced that it has received a letter of award (LoA) Pertubuhan Keselamatan Sosial (PERKESO) on 15th June 2022 to provide the services of developing the Data Analytics Hub for Employment Insurance System for 5 years (1 July 2022 – 30 June 2027) for a contract amounting to RM9.7m.

DSONIC’s proven capability to add more visibility to the market

We are positive on the announcement as we believe the award is a proof of DSONIC’s capability within the software development industry. Besides, we foresee the project award would offer a greater opportunity for DSONIC to win more software development projects from the government in the long run given its strength in the IT Services space.

Earnings revision

We raised our FY23-27F revenue between 0.5 - 0.6% (Table 1) after imputing the new contract contribution. As mentioned, we also revisit our net finance cost, depreciation, and tax expenses assumption following our lower-than-expected forecast figures.

Maintain BUY at new TP of RM1.06 (from RM1.09)

We maintain our BUY call on the stock at a new TP of RM1.06 (from RM1.09), pegged at 37x PER to its FY23F EPS of 2.9 sen.

Source: BIMB Securities Research - 16 Jun 2022