PETALING JAYA: The outlook for light emitting diode (LED) manufacturer D&O Green Technologies Bhd
is expected to be bright in the near term, underpinned by various growth drivers.
Kenanga Research said after its recent meeting with D&O’s management, it remains optimistic about the company’s promising outlook attributed by its SpicePlus 2520 LED and NagaJo 1519 modules, enhanced operational efficiency and the recent strengthening of the ringgit against the US dollar.
“The SpicePlus 2520 features a unique single footprint design across various power levels and colours, making D&O the first LED manufacturer to offer such versatility.
“This design simplifies circuit and lamp configurations, enhances heat dissipation through low thermal resistance and reduces power consumption, while also facilitating easier replication and reuse, resulting in significant cost savings for automotive manufacturers.
“The company expects production to grow by 75% year-on-year (y-o-y), from 575 million pieces in financial year 2024 (FY24) to one billion pieces in FY25,” it said.
In the second quarter of FY24 (2Q24), the group achieved a plant utilisation rate of approximately 70%, accompanied by a gross profit margin of 20%.
Looking ahead, Kenanga said D&O expects utilisation rates to rise to 80% in 3Q24 and 85% in 4Q24, driven by broader LED applications and increased demand for its SmartLED. The company aims to deliver SpicePlus 2520 and NagaJo 1519 modules totaling 86 million pieces in FY24 and 147 million pieces in FY25.
This growth is anticipated to elevate the gross profit margin into the mid-20s, reflecting enhanced operational efficiency, it said.
According to its latest FY23 annual report, the brokerage said a 5% strengthening of the ringgit against the dollar, assuming other currencies remain constant, would have improved its FY23 profit after tax by about RM3.7mil or about 8.4%.
The research house said it is maintaining its earnings forecasts for FY24 and FY25, with an unchanged target price of RM2.64, as well as maintaining its “outperform” rating on the stock.
