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D&O (7204) D&O GREEN TECHNOLOGIES BHD set to ride on electric vehicle trend

KUALA LUMPUR: D&O Green Technologies Bhd is expected to benefit from the rising electric vehicle (EV) trend amid pent-up demand for cars.

This could boost the semiconductor component manufacturer’s future earnings as the recovery of global vehicle sales and higher demand for LED have spurred more enquiries for the company.

Kenanga Research said the group is primed to ride the wave of growing LED content per vehicle, particularly EVs, which is taking the centre stage as one of the key themes for the technology sector this year.

“The pent-up demand for cars that we are witnessing now is consistent with our bullish stance, as we have been highlighting the return of automotive demand since the third quarter of last year.

“The momentum is expected to remain elevated throughout 2021, with EVs taking the centre stage as one of the key themes for the technology sector this year, ” it said in a report.

Kenanga noted that D&O’s proven capability and quality products have enabled the group to continue securing more business wins despite the pandemic.

Customers’ order forecasts have exceeded two to three times beyond its current capacity due to a surge in demand.

The group is in the midst of increasing its equipment capacity to meet customers’ demand that is mainly driven by the increased implementation of infotainment systems even in entry level car models as well as a growing demand for its exterior LED, notably the rear combination lamps.

Kenanga expects the group to turn in stellar earnings ahead.

The research house has raised its forecast core profit after tax and minority interests for financial year 2020 (FY20) and FY21 by 11% and 29% to RM41.5mil and RM82mil, respectively, in anticipation of heightened demand for automotive LED.

Kenanga has also maintained its “outperform” rating on the stock with a higher target price of RM3.40, from RM2 previously.

https://www.thestar.com.my/business/business-news/2021/02/09/do-set-to-ride-on-electric-vehicle-trend

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