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Saturday, December 23, 2017

D&O: Bullish Breakout

Background

D&O Green Technologies Bhd ("D&O") is involved in the semiconductor industry in various capacity such as provision of full trunkey contract manufacturing, manufacturing of semiconductor components and machinery, investing in semiconductor business in China and merchandising of semiconductors components.

Historical Financial Performance

D&O's profits have been rising steadily for the past 3 years.


Graph 1: D&O's last 10 yearly results

Recent Financial Results

In QE30/9/2017, net profit rose 81% q-o-q or 167% y-o-y to RM6.7 million while revenue rose 8% q-o-q or 7% y-o-y to RM111 million.


Graph 2: D&O's last 10 quarterly results

Latest Financial Position

As at 30/9/2017, Financial position is deemed satisfactory with current ratio at 1.77 times and gearing ratio at 0.81 times.

Valuattion

D&O (closed at RM0.745 as at Dec 22) is now trading at a trailing PER of 38 ttimes (based on last 4 quarters' EPS of 1.94 sen). At this PER, D&O is deemed fully valued.

Technical Outlook

 D&O broke above its ascending triangle at RM0.71 as well as its recent high of RM0.73. With this double breakout today, the stock is expected to continue with its prior uptrend.


Chart 1: D&O's daily chart as at Dec 22, 2017 (Source: Malaysiastock.biz)


Chart 2: D&O's weekly chart as at Dec 22, 2017 (Source: Malaysiastock.biz)

Conclusion

Despite fully valued, D&O is a good stock to long-term investment. In the short to medium-term, the stock may benefit from the strong global demand for semi-conductor. I believe the technical outlook is bullish and it is now a good trading BUY.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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