D&O Green Technologies (or simply D&O) operates primarily in semiconductor industry providing services of OEM, ODM and OBM in automotive, general lighting, backlight unit and sensor applications. Majority of its customers are located in the Asian markets, making up more than 65% of its total revenue, where 20% of its revenue is coming from the European customers, and on top of that, we could observe that the U.S. customers are doubling from mere 5% to almost 10% of its revenue in its latest quarterly report.
In terms of sales, 70% come from the automotive segment, 29% from general lighting and 1% from backlight units for televisions. In the recent years, D&O's key earning contributor, Dominant Opto Technologies, has emerged as a renowned automotive lighting supplier in major European and American countries. D&O manufactures LEDs for automotive dashboard backlight, electric windows, signal lights on car gear sticks, exterior automotive signal lights, stop lights and may venture into developing headlights in the future. According to PublicInvest Research, D&O has about 10% market share in the automotive interior lighting segment and its LED can be found in major car brands such as Volkswagen, Mercedes-Benz, Hyundai, Kia and Chinese car makers.
As we could see here, the profit margin for D&O is fairly low even coming back from three consecutive years of losses. The profit margin has gotten slightly better (which is still pretty low IMO) only in 2015 when they begin to concentrate in the automotive segment.
Although profit margin remains low, what we could see here is that the PBT has increased year-on-year since 2013 and the most recent annual report has shown that the PBT in 2015 was more than double the previous year.
Even in its latest quarterly report, it was reported that although the revenue was lower due to their deliberate shift in business direction, the gross margin rose to 23% in 3Q16 (3Q15: 20%), bolstered by a favourable change in sales mix and a strengthening US Dollar against the Malaysia Ringgit. Speaking of the exchange rate, I am pretty sure that many of you here are aware of the depreciation of our local currency recently. As a net beneficiary of the strong US Dollar, it is believed that D&O may achieve an even better revenue in the near future since Malaysia Ringgit is forecasted to remain volatile and weak this year.
In terms of its financial position, D&O has turned from a net debt position into a cash-rich company after the disposal of 10% stake in Dominant Opto Technologies to Epistar, one of the world’s largest LED makers. Epistar is Taiwan's leading LED manufacturer and this partnership has so far brought in more sales and orders to D&O due to Epistar's prestigious status in the LED industry.
VenFx
$0.50 is the fair price lar, if continue to register improving qtr to qtr results $0.80 may be achievable.
Let see ...
2017-03-06 00:40