Datasonic upbeat on potential near-term jobs

PETALING JAYA: Datasonic Group Bhd is experiencing heightened optimism on potential near-term contracts as the group aims to participate in upcoming tenders for national security-related and digitalisation solutions.

This is besides the potential re-tendering of the online renewal of temporary employment passes for foreign workers (EPLKS).

RHB Research has increased Datasonic’s core business target price-earnings (PE) ratio to 25 times from 20 times.

However, the research house has lowered Datasonic’s earnings forecast for financial years 2020 to 2021 by 13.9% to 8.4% due to potential lower orders for passport-related solutions by 13.9% to 6.2%, given the movement control order and travel restrictions.

Datasonic has been given a month extension on EPLKS, which has prompted the market to speculate that the lucrative contract could be up for tender soon.

“Should the government decide to call for tender or request for proposals from other solution providers, we believe there could be a handful of interested bidders including Datasonic. Based on our calculation on existing processing fees of RM125 per renewal, this could potentially generate a revenue stream of Rm150mil, assuming a volume of two million per annum at a 40% discounted fee,” said RHB Research.

Datasonic is believed to be among the frontrunners for the National Integrated Immigration System (NIISE) potential rollout in June.

RHB Research said the group is also keen to participate in the upcoming national security, border-related and digitalisation solutions given its core competency in these areas.the near-term potential news flow on government-related contracts include Foreign Visa System (VLN), One-stop Centre (OSC), Foreigner Identity Card (i-kad), Electronic Medical Records (EMR), and the National Digital ID as the government looks to accelerate digitalisation efforts.