Quick take: D&O shares fall despite earnings beat

KUALA LUMPUR: Shares in D&O Green Technologies are trading almost 2% lower in early trade Wednesday despite reporting a better-than-expected set of third-quarter earnings.

The counter fell 1.97%, or three sen to RM1.49 with 2.4 million shares traded.

D&O’s net profit surged 63.4% to RM14.7mil in the third quarter ended Sept 30 against RM9.01mil last year. Its revenue rose to RM158.8mil during the quarter from RM125.7mil previously.

In the first nine months, it posted a net profit of RM19.3mil on revenue of RM366.2mil.

MIDF Research said despite the stellar 3QFY20 results, 9MFY20 normalised earnings still came in lower at RM19.9mil, a decline of 7.7% year-on-year.

“Nonetheless, we view that the group’s 9MFY20 financial performance has exceeded ours and consensus expectations, although it only accounted for 62.7% and 61.9% of full year FY20 earnings estimates respectively.

“Based on historical trend, fourth quarter earnings would usually be the group’s best quarter performance for the year which is in-tandem with its customer demand. Premised on this, the

group’s fourth quarter results would come in stronger as compared to the third quarter,” MIDF said.

The research house is raising FY20-FY22 earnings higher to between RM34.7mil to RM68.1mil mainly to account for the new business wins and healthier profit margin.

“We are rolling forward our valuation base year to FY22 and derive a new target price of RM1.54 (previously RM1.01). This is premised on pegging FY22 EPS of 5.3sen against forward PER of 29.0x,” MIDF said.

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D&O Green Technologies , MIDF


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