INVESTMENT HIGHLIGHTS

• 9MFY17 earnings within expectation

• Earnings for 9MFY17 soared by 106%yoy

• Earnings forecast maintained

• Maintain NEUTRAL and TP of RM0.66

9MFY17 earnings within expectation. D&O’s 9MFY17 net profit of RM15.4m is within expectation as it makes up 78% of our full year assumption.

Earnings for 9MFY17 soared by 106%yoy. The significantly better earnings is caused by the 10% increase in revenue to RM330.8m. The strong 26% expansion in the Automotive Segment has more than offset the decline in the Non-Automotive Segment. This is well within expectation as we had already anticipated better margins from the automotive segment.

Earnings forecast maintained. We maintain our FY17 net profit forecast of RM19.7m. We also maintain our FY18 net profit forecast of RM26.9m as results are in-line.

Maintain NEUTRAL with TP of RM0.66. Our TP of RM0.66 is based on an unchanged PER of 25x pegged on FY18F EPS of 2.6 sen. The 25x PER is a slight discount to the average PER of global lighting players that average at 27x.

Source: MIDF Research - 30 Nov 2017