RHB Investment Bank Bhd (RHB Research) has reiterated its BUY recommendation for Datasonic Group Bhd, with a target price of 61 sen, down from 68 sen previously, citing a 53% potential upside. The research house highlighted positive developments including the extension of passport-related contracts and a comprehensive maintenance deal for the Facial Live Capture (FLC) image system awarded by the Ministry of Home Affairs (KDN).
Datasonic recently secured a one-year contract extension from KDN, valued at RM150.5 million, for the supply of Malaysian passport documents and polycarbonate biodata pages. The new contract runs from Dec 1, 2024, to Nov 30, 2025.
RHB Research noted that the extension underscores the group’s reputation for quality and reliable service in mission-critical government projects. The company is also working on proposals for enhanced passport solutions and improved printing systems, which are currently under evaluation.
In addition, the group also won an RM6.4 million comprehensive maintenance contract for the FLC image system. This contract, covering equipment, software and applications across Immigration Department offices, spans 36 months from Feb 25, 2025, to Feb 24, 2028. According to RHB Research, these wins are within its order replenishment assumptions.
Datasonic’s current order book exceeds RM260 million, supported by these extensions. The company is also eyeing opportunities in overseas projects due to its cost efficiency and the high quality of its security documents. Locally, it aims to secure more contracts in auto gate systems and IT-related government solutions.
RHB Research views Datasonic’s earnings outlook as robust, buoyed by steady demand for its government-related solutions and improved margins from average selling price adjustments. The contract extension is expected to alleviate concerns over the lack of long-term contracts for its MyKad and passport-related solutions, potentially improving investor sentiment.
