FIGURE 1: DATASONIC GROUP
BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2020 annual report.
1. GENERAL
INTRO: Datasonic’s is one of the leading security-based ICT solutions
providers in the market. Its core business is in providing highly secured
national identification (“ID”) cards, mainly the Malaysian ID Card (MyKad),
Malaysian passports and personalisation solutions, as well as other large-scale
ICT software system solutions and integrated security and surveillance system
solutions to various other government agencies and municipal bodies.
2.
NOTABLE
POINTS:
a. In FY2020, the Group’s revenue strengthened
12.7% to RM247.540 million from RM219.559 million, due mainly to higher
revenues from higher deliveries of the MyKad, as well as consumables for the
MyKad, to Jabatan Pendaftaran Negara, higher quantity of financial cards sold,
new revenue streams from Indonesia and the provision of personalisation services
and maintenance services.
b. The Group’s manufacturing segment currently
operates 2 manufacturing centres located in Klang and Petaling Jaya,
manufacturing of smart cards (e.g. MyKad, membership cards, loyalty cards and
insurance cards) and passport booklets with embedded chips.
c. Latest developments include business development
in the Philippines and Nigeria, as well as venture into the solar energy
business.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 247.5 million as
reported in 2020 annual report, this is a medium revenue company.
b.
SHARE PRICE: from 2016-2021, share price range
between RM0.50 to RM1.50.
c.
EARNING PER SHARE (EPS): earning per share in
last 5 years was overall steady, ranging from 2.71 to 4.96 sen.
d. PRICE TO EARNINGS (P/E) RATIO: current P/E ratio
is at 33.18, which shows that DATASONIC’s share price is overvalued compared to
its earnings.
e.
FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 10.9
million, which is around 3% of total assets.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2020 financial year, DATASONIC
declared a dividend payout of 3 sen per share to its shareholders, which
amounts to a dividend yield of 5.45%.
b. DIVIDEND PAYOUT RATIO: the dividend payout is
68% of the earnings in the financial year. Also, the dividend to earnings ratio
in the last five years ranged from 64 to 93%.
c. CONSISTENCY: This counter’s dividend payout has
been very consistent (dividend paid to shareholders in 5 out of 5 years), the dividend
paid to shareholders in the last five years ranged from 2.5 to 4 sen per share.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2020 financial year, DATASONIC
reported a good return of shareholders’ equity, at 23.5%.
b. COST-TO-INCOME RATIO: the cost-to-income ratio
is 291%, which is relatively low. Unlike manufacturing sectors, IT services
companies have a much reduced cost in terms of labour cost and raw material
costs. Most of the business activities were performed online and highly
automated. Hence, IT industries generally have a much lower cost-to-income
ratio compared to manufacturing sectors.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 51%, whereby its debt level is less than its equity, resulting in a
healthy balance sheet.
d.
CASH FLOW: cash flow is positive, at around RM 40.2
million, equivalent to RM 0.03 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is moderately well supported by institutional investors, there are 12 institutional
investors at top 30 major shareholders list, including few investment funds but
not including insurance funds. Its major shareholders are Chew Ben Ben (16.98%),
Urusharta Jamaah Sdn Bhd (9.79%) and Demi Mekar Sdn Bhd (8.12%).
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