Big swing on Datasonic share price

KUALA LUMPUR: Datasonic Group Bhd’s share price swung wildly yesterday.

The stock plunged as much as 24% to a day’s low of 69 sen. Nonetheless, the e-government service provider recouped all lost ground to close unchanged at 94 sen.

Trading volume soared to 122.45 million shares, exceeding its 200-day average trading volume of 12.06 million shares by 10 times.

Some quarters commented that the political landscape change casts uncertainties on the company’s prospects of securing public contracts.

Notably, Datasonic is believed to be in the race for two government contracts — the foreign visa system and the National Integrated Immigration System. The latter is reportedly worth a hefty RM1 billion to RM1.5 billion.

Prior to the change of government, the two public contracts were expected to be announced in the current quarter.

Also, expectations then had drawn interest in e-government service providers, including MyEG Services Bhd.

The last time Datasonic saw such a dramatic decline was on Feb 26, when its share price tumbled 25.7% or 36 sen to RM1.04.

Datasonic had been steadily rising since March 2019 from 45 sen before reaching a one-year high of RM1.67 on Jan 24. Since then, the stock has been declining.

Year to date, it has lost 36.5% or some RM729 million in market capitalisation.

It is worth noting the wide gap between the target prices pegged by the two analysts tracking the stock.

According to Bloomberg, RHB Research’s target price is  RM1.96 and BIMB Securities’ at 43 sen.

Datasonic revealed in its quarterly results announcement that its order book amounted to RM611 million as of end-2019.

For the nine months ended Dec 31, 2019, the company’s net profit doubled to RM20.18 million from RM8.99 million as the supply volume of smart cards and passports increased.