KUALA LUMPUR: The resumption of MyKad and consumables supply, coupled with strong demand for passport-related solutions, has pushed Datasonic Group Bhd's core earnings to a multi-year high, RHB Research said.
RHB Research added that Datasonic's RM75.7 million core earnings for the year ended March 31 2023, which was 6.3 times higher year-on-year, had come in broadly line, accounting for 94.3 per cent and 95.4 per cent the firm and consensus full-year forecasts.
RHB Research said Datasonic's ability to secure any contract extension on its existing solutions should lift the current share-price overhang.
Also, its current below-mean valuation presented a good buying opportunity, the firm added.
"Effective supply chain planning and execution allowed Datasonic to ensure sufficient supplies meeting the demand for the national security documents during the quarter where the passport chips and booklet deliveries were at 850,000 (3QFY23: 600,000) while polycarbonate data pages were up sequentially at 870.000 from 828,000.
"There was 582,000 MyKad consumables delivery (up from 423,000 quarter-on-quarter) and 611,00 0for raw card and chips," RHB Research said.
The firm said contributions from other contracts/orders such as bank card personalisation and recognition from the various security documents and maintenance services were stable.
RHB Research maintained its "Buy" call on Datasonic with a new target price of 57 sen from 56 sen.
Meanwhile, Datasonic executive chairman Datuk Abu Hanifah Noordin said the past few financial years had been highly challenging for it due to the Covid-19 pandemic.
"Hence, we are delighted to have recovered healthily from the pandemic-related downturn and delivered a robust top and bottom-line performance for FY23.
"Moving forward, elevated market uncertainties is expected to persist and global economies will experience a slowdown compared to the previous year. For us, the situation has been manageable thus far and we are confident to overcome the obstacles ahead by leveraging on our technical expertise, proven track record along with sound management practices."
Abu Hanifah said despite the headwinds, the demand for passports had been strong since the reopening of international borders and the company anticipated the trend to continue in the near future.
"With that, Datasonic remains highly committed to meeting the demand with timely and uninterrupted deliveries as part of our ongoing contributions to national security.
"In addition to this core focus, the group is also excited about the potential for orders of MyKad to rebound pre-Covid-19 levels," he added.
Abu Hanifah said for the fourth quarter under review, Datasonic reached a new milestone as well by delivering its record-breaking quarterly revenue of RM104.9 million, the first time its quarterly revenue exceeded the RM100 million mark.
This was an increase of 93.1 per cent year-on-year from RM54.3 million in the previous year corresponding quarter.
Similarly, the fourth quarter's net profit expanded 69.8 per cent year-on-year to RM22.7 million versus RM13.4 million in the same period in 2022.
The solid quarterly performance was driven by greater supply of passports, smart cards and personalization services, he said.