not vested
Trading Buy: D&O-7204
(Last price: RM0.695, Potential upside +15.1%)
Company Profile
D&O offers packaging solutions (assembly and testing) for LED products. Specifically, D&O focuses on automobile LED with ~95% of 2018 revenue contributes by automobile-related products
Trading Catalyst
D&O, a world leading LED packaging solutions provider, is strategically-positioned to partake in the multi-year revolutionary change in the automobile lighting industry
The stock is steeply oversold after sliding 31% from 52W high of RM1.00 to RM0.695 has grossly priced in the short term worries of a weaker 1Q19 results due to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) regulation as well as the US-China trade war.
However, a promising industry outlook, expectations of a US-China trade deal, capacity expansion and an improving product mix could bolster D&O’s earnings outlook over the medium to long term.
Technical View
Resistance: RM0.715 / RM0.755 / RM0.800
Support: RM0.675 / RM0.650
Cut loss: RM0.645
Key Financial Stats
Trading at undemanding 16x FY19E (40% and 50% discounts to its German competitor – OSRAM 27x and 2Y average P/E of 32x), supported by 30% EPS FY18-20 CAGR
Source: HLIB