KUALA LUMPUR: RHB Research has maintained its Buy call on Datasonic with a reduced target price of RM2.10 based on an unchanged 25 times FY16F price per earnings.
"We expect a major re-rating in its share price should Fuelsubs House Sdn Bhd (FSH) secure the fuel subsidy rationalisation programme as the Government looks set to announce the new mechanism to the public. Hence, we are maintaining our Buy call," it said on Monday.
The research house said management shared potential initiatives going forward but cautioned near-term earnings could come under pressure on slower-than-expected MyKad orders.
It said its 30%-owned associate FSH, meanwhile, is in the midst of finalising its proposal on the fuel subsidy rationalisation program.
Datasonic intends to leverage on its existing strength by implementing the program via MyKad as the core platform, it said.
"This would help to minimise upfront investment costs as vehicle owners would be able to incorporate their respective fuel subsidy allocation into their existing MyKad vis-à-vis via the issuance of a new card.
"On a side note, the Second Finance Minister Datuk Seri Ahmad Husni was recently quoted as saying that the proposed new mechanism for petrol and diesel subsidies has now been completed. We expect to hear more developments on this over the next couple of weeks," it said.
Datasonic said that its earnings over the near term could come under pressure as orders for its MyKad delivery have slowed down since 1QFY15.
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