• Datasonic (DSONIC) announced that it received and accepted a letter from the Ministry of Home Affairs (MHA) for the additional supply of Malaysian passport chips valued at RM31.4mn, pushing the total contract ceiling from MHA to RM350mn.

• We raised our FY23-25F earnings forecast by 2-4% following this as well as the assumption of continuous delivery of the passport products in the future.

• We maintain our BUY call on DSONIC with a higher TP of RM1.11 (from RM1.06), pegged at 37x PER to its FY23F EPS of 3.0 sen. We believe this is fair given solid demand for passports and MyKad since full economic openings and borders reopening.

Additional Passport Chips Contract from KDN

DSONIC announced that it received and accepted a letter dated 9th August from the MHA for the additional supply of the Malaysian Passport Chips for a period from 1st December 2021 to 30th November 2023. The said amendment is worth RM31.4mn, bringing the total contract ceiling value to RM350mn.

Revised up earnings forecast

We raised our FY23-25F earnings forecast by 4%/ 2%/ 2% following the additional contract value for the passport chips as well as our assumption of DSONIC continuous passport products delivery to the government in the future.

Reiterate BUY at higher TP of RM1.11 (from RM1.06)

We reiterate our BUY call on DSONIC with a higher TP of RM1.11 (from RM1.06), pegged at 37x PER to its FY23F EPS of 3.0 sen. We believe this is fair given solid demand for passports and MyKad since full economic openings and borders reopening since April.

Source: BIMB Securities Research - 16 Aug 2022