DSONIC – MYR3.60 (Stock Code: 5216) (Bloomberg Code: DSON MK Equity)
above: DSONIC weekly chart (click to enlarge)
All DSONIC positive signals above suggest a very strong weekly Wave 3 and 5 up-trend. DSONIC has very firm support and clear upward target areas of MYR3.78, MYR4.78 and MYR5.98. Stop-loss is at MYR2.94.
DSONIC made a major weekly Wave 2 low of MYR0.52 (Jul 2013) with grossly oversold and bullish signals. All its positive signals above suggest a very strong weekly Wave 3 and 5 up-trend. It is likely to break into higher territory, as it breached its key resistance areas in a very clear upward weekly Wave 3 and 5 move. Short-term buy on dips for DSONIC with firmer support and
clear upward target areas of MYR3.78, MYR4.78 and MYR5.98. Stop-loss is at MYR2.94.
DSONIC recently broke above the MYR2bn market capitalisation since our last weekly write-up in Nov 2013 when the market capitalisation broke above the MYR1bn. The strong rise in the stock can be attributed to investor optimism on its future earnings potential post its share-split exercise. Its major source of revenue is the supply of smart cards and consumables, which contributed the majority of the group’s revenue.
The company is expected to announce it 4QFYE2013 results soon. Looking at its 3Q14 results, DSONIC continues to record strong revenue and profit growth for the same period year on year which can be seen from the table below. According to the company, the improved profitability was attributed to effective cost control measures instituted by management and higher revenue.
On 28 Feb 2014, DSONIC had proposed a 1-for-1 bonus issue of 675 million shares of 10 sen each. The date has yet to be determined and will be announced later.
Maybank-IB does not have fundamental coverage of DSONIC. A check of Bloomberg consensus reveals that just one broker has coverage on the stock, with a BUY call. The stock is currently trading at a high historical PER of 38.7x and a P/BV of 15.7x.
Datasonic Group Berhad (DSONIC) provides ICT Solutions. The company's solutions include smart card personalization such as secure ID or chip-based credit/debit bank cards.
by Maybank IB
