Who will win the RM1.5 bil Immigration System contract?

By Doreenn Leong

Interest in frontrunners for the RM1.5 bil Integrated Immigration System (IIS) contract has been on the rise on the back of talks that the contract will be awarded soon.

Shares of Datasonic Group Bhd surged almost 40% in about a month to RM1.27 on May 12 from 91 sen on Apr 13 while Scicom MSC Bhd gained 29% to 94 sen on May 8 from 73 sen on April 7. Likewise, HeiTech Padu Bhd rose 50% to RM1.04 on May 8 from 69 sen on April 7 while Opcom Holding Bhd jumped 53% to 58 sen from 38 sen during the one-month period.

The government was believed to be re-tendering the IIS project due to some changes in the specification last year. Earlier, the request for proposal

(RFP) had closed on Aug 16 and saw some 30 bidders for the project. Among the frontrunners include unlisted company, S5 Systems Sdn Bhd, which could be the dark horse in the race.

S5 is a global integrated security solutions provider, delivering solutions to governments and enterprises.

Based on filings on the Companies Commission of Malaysia, NSA Technology Sdn Bhd is the holding company of S5 Systems. Meanwhile, NSA Technology is held by NSA Technology (L) Inc, which is believed to be controlled by a Malaysian businessman, who is also involved in the e-government solutions and services.

There are talks that S5 Systems could seek a back-door listing via ConnectCounty Holdings Bhd, an interconnect and cable solutions provider.

 The directors of S5 Systems are Syed Mohammad Hafiz Syed Razlan, Adi Wira Abd Razak and Aaron Lok Khy-Min.

The company posted a net profit of RM152.84 mil in the financial year ended June 30, 2014 on the back of RM234.92 mil. However, its earnings and revenue plunged to RM7.23 mil and RM55.3 mil respectively in the subsequent financial year.

However, S5 Systems posted a higher net profit of RM108 mil in FY18 from RM64.5 mil in the previous year on the back of increased revenue of RM147.75 mil versus RM96.1 mil.

The ISS is supposed to replace the RM3.5 bil Sistem Kawalan Imigresen Nasional (SKIN) project, which was awarded to education software licence purveyor Prestariang Bhd via direct negotiation in 2017.

At that time, SKIN was to replace Malaysian Immigration System (MyIMMS), which was awarded to HeiTech Padu. However, the new government under Pakatan Harapan terminated the project due to high cost and ‘weaknesses’ in the SKIN concession.

Prestariang decided to make a legal claim of RM732.86 mil from the government as a result of the termination.

Interest in Datasonic was likely to have surged following expectations that the company will bag the IIS contract.

“We view the recent rally in Datasonic’s share price to be attributed to investor optimism over the potential National Integrated Immigration System (NIISe) contract award that will be highly accretive to Datasonic’s earnings for the foreseeable future, due to be awarded in May or June,” Inter-Pacific Research said in its notes on May 8.

The research house initiated coverage on Datasonic with a buy recommendation, setting a target price of RM1.37. 

“We believe Datasonic is in a prime position to be awarded some of the upcoming projects given its past work history with the Malaysian Government and the cost savings it can provide due to its integrated operations,” it said.

DGB is one of Malaysia’s largest security-based ICT solutions providers. The Group is best known for its provision and personalization for highly secure national identification (NID) cards and supply of e-Passport chips, polycarbonate datapages, passport booklets and related NRID and passport printing systems to the Malaysian Government.

Other operations of DGB include the provision of large-scale customized software and hardware systems for secure identification and total smart card solutions to the financial sector.

“We like DGB for its technical expertise and established position in the market, and strong balance sheet and cash position,” Inter-Pacific said.

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