Friday, September 09, 2016

DSONIC: Better Days Ahead?

Results Update

In QE30/6/2016, DSonic's net profit rose 10% q-o-q or 68% y-o-y to RM20.8 million while revenue rose 3% q-o-q or 40% y-o-y to RM76 million.  Revenue rose q-o-q principally due to commencement in supplying components for smart cards. This led to higher profits.

Table: DSonic's last 8 quarter's result

Chart 1: DSonic's last 17 quarter's result

Big Government Contracts In Hand

DSonic has 3 large government contracts in hand worth about RM802.53 million. The contracts are to do the following work:
  • To supply Malaysian Passport booklets for a period of five years or 13.416 million passports commencing December 1, 2016 (Value: RM222.38 million) 
  • To supply12 million MyKad raw cards and MyKad consumables for three years and six months commencing July 1, 2016 (Value: RM260.4 million) 
  • To supply Malaysian passport chips for five years commencing Dec 1, 2016 (Value RM318.75 million)

DSonic (closed at RM1.54 yesterday) is now trading at a PE of 29 times (based on last 4 quarterly EPS of 5.3 sen). In June, RHB was reported to have valued DSonic at RM2.00 (based on a 2017F PE of 25x).
Technical Outlook

DSonic has just broken above its downtrend line, RR at RM1.50. If the bullish breakout can sustain, the stock may begin its next upleg.

Chart 2: DSonic's daily chart as at Sep 8, 2016 (Source:


Based on improved financial performance & mildly bullish technical outlook, DSonic could be re-rated as TRADING BUY from a TRADING SELL.


I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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