News / Press Release

D&O to turn in another record-breaking results

Date: 24 January 2022 Source: NST

KUALA LUMPUR: Kenanga Research expects to see another record-breaking performance in D&O Green Technologies Bhd's financial year 2022 (FY22) on the back of overwhelming automotive demand.

With all-time high earnings for FY21 already in the cards, the firm believes the recent price correction served as a good opportunity for investors to build a position as D&O is on track for a stronger fourth quarter (Q4) FY21.

"In tandem with a seasonally stronger year-end quarter, we are sanguine that the group is on track to meet our FY21 core net profit (CNP) of RM110.9 million in which we are estimating a CNP of RM39 million for Q4 FY21," it said.

In addition, Kenanga Research said D&O's Q1 FY22 might continue to see elevated demand due to an influx of orders, defying seasonal trends.

In anticipation of growing demand, the firm said D&O had begun pulling in equipment for its Plant 2 (circa 250,000 square feet) which will commence operation in Q2 calendar year 2022 (CY22).

"Thanks to the company's proprietary triple deck encapsulation system, Plant 2 will be able to cater for customers' demand until 2025 where Plant 3 (circa 330,000 square feet) is expected to be ready for new cutting-edge automotive light-emitting diodes (LEDs)," it said.

The firm has maintained its "Outperform" call and target price of RM6.60 on D&O.

"We believe our premium valuation is justified by its growth prospects and strong market presence.

"As such, we view the recent share sell-down as a good opportunity for investors to build a position," it added.