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Datasonic eyes ops expansion, overseas venture
WHILE the MyKad has been the sole identification document that every Malaysian possesses, not many may know the people, behind Datasonic Group Bhd's new and improved MyKad.
Datasonic chairman General (Rtd) Tan Sri Hashim Mohd Ali tells StarBizWeek that the company is eyeing to expand its operations, and gain the prominence of a listed entity to venture overseas.
Slated to make its debut on the Main Market of Bursa Malaysia on Sept 3, Datasonic is one of the main market players in the Malaysian smart card solutions industry.
With its initial public offering (IPO) at RM2 per share, the company expects to raise RM40.75mil in proceeds of which 66.5% (RM27.1mil) would be utilised as capital expenditure, while 14.7% (RM6mil) is allocated as research and development expenditure.
Its IPO involve the issuance of 20.37 million new shares and the offer for sale of up to 7.93 million existing shares.
“There are ups and downs in economic times, and I think this is the right time for us to go for a listing, otherwise we would have to wait for another opportunity to come, and we can't wait to grow the company,” says Hashim.
He says currently, the company has secured contracts worth RM531mil, which would keep its busy for the next five years, and buoy its expansion plans.
The major chunk of its order book is for the sale of cards at RM357.8mil, followed by the sales of products and provision of services at RM109mil and the sale of consumables at RM63.24mil.
Of the secured contracts, about RM116mil would be recognised for its financial year ending Dec 31.
Two of the group's subsidiaries Datasonic Corp Sdn Bhd and Datasonic Technologies Sdn Bhd are active in the market with the former providing smart card personalisation services, sale of consumables, and also maintenance, support, training and consultancy for smart card projects, while the latter manages projects and implements smart card software and hardware customisation for smart card and other large scale customised ICT projects.
It is the only ICT vendor involved in three major smart card programmes in Malaysia, namely the MyKad, automated teller machine chip-based smart card, and Europay MasterCard and Visa chip-based credit card.
Last year, Datasonic was awarded a contract from the National Registration Department (NRD) to supply the latter four million new MyKad. It also secured a contract recently from the Immigration Department of Malaysia to supply new passport polycarbonate datapage with laser engraving personalisation equipment from Feb 1, 2013 to Jan 31, 2018.
The enhanced MyKad is an upgrade of the existing one in terms of design and security features as it uses the latest technology to ensure a better adhesion between the printed layer and the overlay of the card.
It is made from durable polycarbonates and uses incision laser technology on the surface of the card with a new Sirim-approved chip that had been tested in semiconductor labs.
Since the launch of the new MyKad in January, Malaysians have been clamouring to apply for the replacement to the tune of an average 21,000 applications daily, which bodes well for Datasonic.
On the need to become a public-listed company, Hashim says it is inevitable that Datasonic will go against other public-listed companies, and it will be an added advantage for the companies to be listed.
“We had in the past gone against other public-listed companies, and although we are better in terms of financials and resources, clients still chose the one with the comfort of being backed as a public-listed entity,” he said.
He said although the company is a well-established name in the country with a lot of enquiries from potential clients, when it comes to the tender process, Datasonic will still fail in favour of other public companies.
“That is the rationale for us to become listed and gain prominence to grow big,” he said.
Using part of the capital expenditure, the company intends to utilise RM8mil to set up new premises to facilitate the group's business expansion. The headquarters cum regional personalisation solution centre is expected to have a built-up area of about 16,000 sq ft and will enable the company to increase its production capacity by about 3,500 cards per day.
Besides that, it would be allocating RM19.1mil to set up a manufacturing plant, which is expected to enable the company to have a production capacity of about 750,000 smart cards per month. However, the location for the manufacturing plant has yet to be identified.
For the past three years, Datasonic had enjoyed steady growth with the company recording a net profit of RM15.9mil over a revenue of RM78.4mil for 2011.
It achieved a net profit of RM7.6mil against a revenue of RM39.6mil in 2010 and posted a net profit of RM9.1mil over a revenue of RM32.1mil a year earlier.
Datasonic started as a company in 1980 selling ICT products like computer forms and credit card imprinters to financial institutions in Malaysia, under the name Bumi Packaging & Storage (M) Sdn Bhd.
It then ventured into the personalisation services and started its business relationship with Datacard Corp. In 1991, Datacard became a 49% joint-venture partner and as a result it was awarded the distribution rights for the Datacard Central Issuance Systems and Solutions in Malaysia.
In 1999, Datasonic was the technology provider and exclusive sub-contractor of Dibena Enterprise, who is a key member of GMPC Corp Sdn Bhd, a consortium of five companies for the national MyKad project.
It is the only consortium member who was assigned to design, set up and commission a personalisation centre as well as to supply solution, consumables and technical support and maintenance services to the NRD.
Post listing, Dibena Enterprise Sdn Bhd will have a 53.06% stake in the company while managing director Datuk Abu Hanifah Noordin owns 15.49% of the company after offering to sell 7.9 million or 8.81% of his existing stake.
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