INVESTMENT HIGHLIGHTS

• Court case against DSONIC

• Neutral on the news

• Earnings estimate maintained

• Maintain NEUTRAL with TP of RM1.90

Court case against DSONIC. Fima Corporation Berhad (FIMACOR) announced that it has commenced a High Court action against Datasonic Technologies Sdn Bhd (DSONIC). We gather from Bursa announcement that FIMACOR is claiming RM24.98m being the amount due and owing by DSONIC for 1.5m Malaysian passport booklets which were supplied by FIMACOR to DSONIC.

Neutral on the news. Pending the actual outcome of the court decision, we are neutral on the news. In FY18 (year end is March), FIMACOR “production of security and confidential documents” (PSCD) division profit before tax declined by 57% yoy to RM25.5m. This is mainly caused by 39% decline in revenue to RM142.4m due to expiration of the contract to supply certain travel documents in 1QFY18.

Earnings estimate maintained. FY19 core net income forecast is maintained at RM35.7m. As for FY20, we maintain our core net income forecast of RM32.3m. We are not assuming any impact from the court case pending the actual outcome.

Maintain NEUTRAL with TP of RM1.90. Our TP is based on SumOf-Parts valuation (Refer Below). While the outlook is challenging for PSCD division, we are positive on the outlook for plantation division in the long run.

Source: MIDF Research - 31 Jul 2018