• Datasonic is an ICT solutions provider involved in the provision of smart card personalisation, customisation of software and hardware solutions, project management, consultancy, R&D and technical consultancy. Since its establishment in 1980, the group has formed a strong relationship with several government agencies such as National Registration Department (NRD) and Immigration Department of Malaysia to provide smart card personalisation and customization of software and hardware solutions.
• Poised for a downtrend line breakout. Having corrected 37% from 52-week high of RM1.71 (15 Dec 2015) to a low of RM1.07 (22 Feb), DSONIC’s s hare prices rallied 34% to a high of RM1.44 (2 Mar) before trading sideways to end at RM1.30 yesterday. Given the potential downtrend reversal signal in hourly chart and oversold daily stochastic indicator, we believe DSONIC’s share price is already at the tail end of its sideways consolidation for an imminent downtrend line breakout.
• A decisive breach above RM1.34 (downtrend line and 30-d SMA) is likely to spur prices higher towards the RM1.44 before reaching our long term objective of RM1.56 (50% FR). Key supports are RM1.27 (daily lower Bollinger band) and RM1.22 (23.6% FR). Cut loss at RM1.21.
• Attractive risk to reward ratio with 20% upside against 7.7% downside. All in, we see a good risk to reward ratio for investor with a theoretical entry price of RM1.30 given that the downside to the cut loss zone of RM1.20 is 10 sen (-7.7%) while the upside to the LT target of RM1.56 is 26 sen (+20%).

Source: Hong Leong Investment Bank Research - 1 Apr 2016