• Overview. Datasonic Group Berhad (DSONIC) reported a solid growth in core profit of RM16.7mn in 3Q23 from RM1.5mn in 3Q22 driven by solid demand for passports amid the reopening of international borders.

• Key highlight. However, on QoQ basis, core profit fell by 33% primarily due to lower delivery of MyKad products as the company faced challenges in securing MyKad chips amid global supply chain bottleneck. Notwithstanding that, the management guided that the delivery of MyKad products is expected to normalise in 4Q23 as they have successfully secured ample number of chips.

• Against Estimates: Inline. 9MFY23’s core profit of RM53.7mn was broadly in line with our and consensus estimate at 71%.

• Dividend. A DPS of 0.50 sen was declared (3QFY22: 0.125 sen), implying a payout ratio of 73%. This brings 9MFY23 DPS to 1.25 sen (9MFY22: 0.35 sen).

• Outlook. We remain sanguine on DSONIC business prospects in 2023 primarily driven by robust demand for passports. According to the management, solid demand for passport is expected to continue in 2023 before normalising thereafter.

• Our Call. Reiterate a BUY call at a TP of RM0.80, pegged at 30x PER to FY23F EPS of 2.7 sen.

Source: BIMB Securities Research - 28 Feb 2023