News: Datasonic aims for RM40.75 million from IPO proceeds (Borneo Post)

KUCHING: Datasonic Group Bhd (Datasonic) aims to raise RM40.75 million from its initial public offering (IPO) proceeds, with hopes to list within the second half of 2012.

According to the group’s independent non-executive chairman, General Tan Sri Dr Mohamed Hashim Mohd Ali in an email interview with The Borneo Post, Datasonic aimed to utilise about 66.51 per cent of its funds (or RM27.1 million) for capital expenditure, 14.72 per cent (RM6 million) for research and development (R&D) and the remaining amount for working capital and estimated listing expenses.

The group launched its prospectus yesterday, offering 20.37 million new shares and 7.93 million existing shares at an offer price of RM2 per share.

Six million new shares would be made available for application by the public while about four million new shares would be available for application by the group’s eligible directors, employees and persons who have contributed to the success of the group.

Additionally, 8.51 million new shares would be available for application by Bumiputera investors approved by the Ministry of International Trade and Industry, while 1.85 million new shares will be allotted by way of placement to selected investors.

Hashim explained that Datasonic placed more emphasis on capital expenditure as it has plans to diversify its offerings to existing customers and at the same time expand into China and the Asean region.

“In order to improve operations, increase efficiency and strengthen the group’s market position, we intend to set up a new headquarter-cum-Regional Personalisation Service centre and smart cards manufacturing plant, which will use up a large part of the proceeds raised,” he elaborated.

“There is growing potential in the smart ID and passport industry. We plan to expand our business both locally and overseas post-listing.”

Hashim went on to note that choosing to list now was the right move for the group as it would enable the team to raise funds in time to channel more resources and increase its capacity to carry out more projects.

The current market outlook for both the smart card and smart card solutions markets in Malaysia was favourable due to high demand from existing applications, adoption by new market areas, new technology and improvements as well as new applications being driven by the government and financial sectors.

”Based on an Independent Market Research report, the smart cards market in Malaysia is expected to continue with a cumulated annual growth rate (CAGR) of 3.7 per cent from 2012 to 2016.,” he explained.

“We expect to ride on this growth and are confident that we can and will continue to perform and achieve healthy growth in both revenue and profit after listing.”

Speaking on the upcoming listing, Hashim believed that the subscription rate would be good based on Datasonic’s good financial track record.

“We have a strong board of directors, dedicated staff and focus in R&D. We have started supplying the new MyKads beginning January 2012 and there has been pent-up demand for the latest MyKad.

“We also have a strong order book, which includes major projects like the 5-year contract to supply 10 million new polycarbonate data pages and laser engraving personalisation equipment for the new e-passports.

“Implementation of the laser engraving new polycarbonate data pages will be in early 2013.”

As of 31 May 2012, Datasonic has an order book of more than RM530 million. Out of this amount, an estimated RM116.41 million was expected to be recognised during the financial year ending December 31, 2012.

“There are also a lot of business opportunities in the health care industry. We are aiming to venture into new businesses like e-health solutions. We want to be world class solutions provider in both multi-purpose smart ID and ICAO compliant e-passport,” he enthused.

Based on an ipo price of rm2 per share and 90 million outstanding shares, datasonic hoped to garner a market capitalisation of rm180 million upon listing.

News: Datasonic eyes ops expansion, overseas venture (The Star)

WHILE the MyKad has been the sole identification document that every Malaysian possesses, not many may know the people, behind Datasonic Group Bhd's new and improved MyKad.

Datasonic chairman General (Rtd) Tan Sri Hashim Mohd Ali tells StarBizWeek that the company is eyeing to expand its operations, and gain the prominence of a listed entity to venture overseas.

Slated to make its debut on the Main Market of Bursa Malaysia on Sept 3, Datasonic is one of the main market players in the Malaysian smart card solutions industry.

With its initial public offering (IPO) at RM2 per share, the company expects to raise RM40.75mil in proceeds of which 66.5% (RM27.1mil) would be utilised as capital expenditure, while 14.7% (RM6mil) is allocated as research and development expenditure.

Its IPO involve the issuance of 20.37 million new shares and the offer for sale of up to 7.93 million existing shares.

“There are ups and downs in economic times, and I think this is the right time for us to go for a listing, otherwise we would have to wait for another opportunity to come, and we can't wait to grow the company,” says Hashim.

He says currently, the company has secured contracts worth RM531mil, which would keep its busy for the next five years, and buoy its expansion plans.

The major chunk of its order book is for the sale of cards at RM357.8mil, followed by the sales of products and provision of services at RM109mil and the sale of consumables at RM63.24mil.

Of the secured contracts, about RM116mil would be recognised for its financial year ending Dec 31.

Two of the group's subsidiaries Datasonic Corp Sdn Bhd and Datasonic Technologies Sdn Bhd are active in the market with the former providing smart card personalisation services, sale of consumables, and also maintenance, support, training and consultancy for smart card projects, while the latter manages projects and implements smart card software and hardware customisation for smart card and other large scale customised ICT projects.

It is the only ICT vendor involved in three major smart card programmes in Malaysia, namely the MyKad, automated teller machine chip-based smart card, and Europay MasterCard and Visa chip-based credit card.

Last year, Datasonic was awarded a contract from the National Registration Department (NRD) to supply the latter four million new MyKad. It also secured a contract recently from the Immigration Department of Malaysia to supply new passport polycarbonate datapage with laser engraving personalisation equipment from Feb 1, 2013 to Jan 31, 2018.

The enhanced MyKad is an upgrade of the existing one in terms of design and security features as it uses the latest technology to ensure a better adhesion between the printed layer and the overlay of the card.

It is made from durable polycarbonates and uses incision laser technology on the surface of the card with a new Sirim-approved chip that had been tested in semiconductor labs.

Since the launch of the new MyKad in January, Malaysians have been clamouring to apply for the replacement to the tune of an average 21,000 applications daily, which bodes well for Datasonic.

On the need to become a public-listed company, Hashim says it is inevitable that Datasonic will go against other public-listed companies, and it will be an added advantage for the companies to be listed.

“We had in the past gone against other public-listed companies, and although we are better in terms of financials and resources, clients still chose the one with the comfort of being backed as a public-listed entity,” he said.

He said although the company is a well-established name in the country with a lot of enquiries from potential clients, when it comes to the tender process, Datasonic will still fail in favour of other public companies.

“That is the rationale for us to become listed and gain prominence to grow big,” he said.

Using part of the capital expenditure, the company intends to utilise RM8mil to set up new premises to facilitate the group's business expansion. The headquarters cum regional personalisation solution centre is expected to have a built-up area of about 16,000 sq ft and will enable the company to increase its production capacity by about 3,500 cards per day.

Besides that, it would be allocating RM19.1mil to set up a manufacturing plant, which is expected to enable the company to have a production capacity of about 750,000 smart cards per month. However, the location for the manufacturing plant has yet to be identified.

For the past three years, Datasonic had enjoyed steady growth with the company recording a net profit of RM15.9mil over a revenue of RM78.4mil for 2011.

It achieved a net profit of RM7.6mil against a revenue of RM39.6mil in 2010 and posted a net profit of RM9.1mil over a revenue of RM32.1mil a year earlier.

Datasonic started as a company in 1980 selling ICT products like computer forms and credit card imprinters to financial institutions in Malaysia, under the name Bumi Packaging & Storage (M) Sdn Bhd.

It then ventured into the personalisation services and started its business relationship with Datacard Corp. In 1991, Datacard became a 49% joint-venture partner and as a result it was awarded the distribution rights for the Datacard Central Issuance Systems and Solutions in Malaysia.

In 1999, Datasonic was the technology provider and exclusive sub-contractor of Dibena Enterprise, who is a key member of GMPC Corp Sdn Bhd, a consortium of five companies for the national MyKad project.

It is the only consortium member who was assigned to design, set up and commission a personalisation centre as well as to supply solution, consumables and technical support and maintenance services to the NRD.

Post listing, Dibena Enterprise Sdn Bhd will have a 53.06% stake in the company while managing director Datuk Abu Hanifah Noordin owns 15.49% of the company after offering to sell 7.9 million or 8.81% of his existing stake.