PublicInvest Research is convinced that the worst is over for D&O Green Technologies
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00:00 This morning we're taking a look at LED manufacturer DNO Green Technologies.
00:05 Public Invest Research attended an analyst briefing by DNO's management and
00:10 came away convinced that the worst is over for the company. It kept its
00:14 outperform rating on the stock with an unchanged target price of RM4.37.
00:19 DNO settled yesterday at RM3.55. In its note, Public Invest said it is
00:25 increasingly confident that the company will make a strong comeback in the
00:29 second half of the year on the back of sequential recovery in automotive LED
00:33 sales and margins. This would be led by the China market which contributes about
00:38 45 to 50 percent to the group's revenue. This as Beijing has reportedly pledged
00:43 more stimulus measures to boost demand for vehicles with tax incentives and new
00:47 guidelines on the auto industry. And while demand within China is slowing, car
00:53 exports by its automakers are up and the country has also overtaken Japan as the
00:57 top global car exporter. Going into the second half, loading volume should
01:02 normalize to above 85 percent. Public Invest expects DNO's full year sales to
01:07 break the RM1 billion mark. Meanwhile, gross margin could
01:11 potentially recover to the 23 to 25 percent levels. Inventory levels are also
01:16 expected to ease from the recent high six months to below five months levels.
01:21 So what's the consensus? According to Bloomberg data, analysts are mixed on the
01:26 stock. Two are recommending buy, two say hold and one says sell. Average target
01:31 price RM3.55 which is what DNO closed at yesterday.
01:37 [MUSIC PLAYING]