KUALA LUMPUR (Jan 9): Datasonic Group Bhd has received a letter of award (LOA) and four contract extensions from the Ministry of Home Affairs (MOHA) worth a total of RM175 million.

In a filing on Tuesday (Jan 9), the integrated information and communications technology (ICT) solution provider said MOHA had awarded its wholly owned unit Datasonic Technologies Sdn Bhd (DTSB) a contract to supply MyKad, MyTentera, MyPOCA raw cards and consumables to the National Registration Department (JPN). The six-month contract is worth RM28.69 million and will commence from Dec 1, 2023 to May 31, 2024.

At the same time, MOHA also awarded DTSB letters of extension for four contract extensions of six months, also commencing from Dec 1, 2023 to May 31, 2024.

The contract extensions are for the comprehensive maintenance services of card personalisation centres at JPN for RM11.35 million, the supply of Malaysian passport chips to the Malaysian Immigration Department (JIM) for RM60.2 million, the supply of Malaysian passport documents to JIM for RM25.33 million, and the supply of polycarbonate biodata pages to JIM for RM49.43 million.

Datasonic executive chairman Tengku Datuk Seri Abu Bakar Ahmad Tengku Tan Sri Abdullah said the group is pleased to continue its role as the sole provider of passport solutions to the JIM since 2016.

“These wins reflect our proven track record and delivery. Datasonic has been able to cater to the strong spike in demand for passports since the reopening of our borders as well as for MyKad while navigating through issues such as supply chain interruptions and elevated input costs,” Abu Bakar said in a statement.

He noted that Datasonic's passport delivery hit a new record high in the financial year 2023 (FY2023), and that the group anticipates demand to remain strong moving forward.

Inter-Pacific Research Sdn Bhd analyst Wong Choo Hong told The Edge that the contract extensions have provided the group with better earnings visibility for the second half of 2024 (2HFY2024) and has reaffirmed a healthy order book assumption which is expected to sustain well into FY2025.

The analyst expects Datasonic's MyKad-related orders will pick up in the fourth quarter of 2024 (4QFY2024), and will fill the revenue gap following a significant decline in 2QFY2024 after the group completed its MyKad delivery.

"Overall, by securing the contract, we remain optimistic on the group’s prospects, with its earnings expected to be supported by immediate replenishment needs due to low stock level at issuance centres nationwide for MyKads and passports, the I-Kad rollout and sustained travel demand beyond 2HFY2024," Wong said in an email response to The Edge.

For 2QFY2024, Datasonic registered a net profit of RM18.15 million, down 27.13% from RM24.91 million in the corresponding quarter a year earlier when its earnings leaped over 20-fold amid a surge in applications for passports and MyKad including first-time applications and renewals following the reopening of international borders on April 1, 2022.

For the six months ended Sept 30, 2023 (6MFY2024), Datasonic’s net profit rose marginally to RM37.19 million from RM36.94 million in 6MFY2023, as revenue rose 9.1% to RM172.07 million from RM157.71 million.

MIDF Research analyst Martin Foo Chuan Loon, on the other hand, told The Edge that he did not plan to revise his rating as the latest contracts were already anticipated and that the six-month period for the latest contracts was to give MOHA time to evaluate the contracts given and for Datasonic to supply the products first.

According to him, Datasonic will provide new designs for the products it had previously supplied to the government.

With the market lacking strong contenders for security-related integrated ICT solutions providers, the analyst believes that Datasonic will continue to get more jobs from JPN.

At the time of writing, shares in Datasonic were one sen or 2.25% higher at 45.5 sen, translating into a market capitalisation of RM1.33 billion.