Technical tracker - HLIB Retail Research –9 Aug 2022 D&O: Gro | HLeBroking

Technical tracker - HLIB Retail Research –9 Aug 2022

D&O: Growth remains intact

Leading automotive LED manufacturer. Through its principal operating subsidiary Dominant Opto Technologies Sdn Bhd, D&O is a world-leading surface mount LED manufacturer for the global automotive industry. It offers a comprehensive range of LED packaging solutions under the "DOMINANT" brand name catering to both the interior and exterior automotive lighting.

Improving car sales outlook in China. Being the world's largest automotive market, the China automobile industry association had downgraded China's 2022 automotive sales to 27m units (+3% YoY) from 27.5m as the stringent “zero covid-19” policy has caused lacklustre 1H22 automotive sales. That said, China's June automobile sales passenger car data rebounded strongly at 2.22 million (+41% YoY), and the momentum is expected to extend into 3Q22 with the help of government stimulus policy. This includes halving the purchases tax for <300k yuan gasoline cars to 5%, offering subsidies to consumers to trade-in gasoline vehicles for EVs, and some cities expanded quotas on car ownership.

Increasing usage of LEDs in vehicle. D&O's long-term growth will be supported by the increasing usage of LEDs in vehicles. This is reflected in newly launched vehicles, which now equips more LEDs content in the way of bigger screen and multi-screen, interior and exterior applications. This trend is more notable in EVs, where the design is more stylish and equipped with ambient lighting and a bigger screen to have a more futuristic look. For instance, the BMW ix all-electric SUV flagship model features a large 14.9-inch infotainment display combined with a 12.3-inch digital gauge cluster. We note that this trend also applies to the mid-range and mass market cars nowadays.

All in, market consensus is anticipating D&O's core PATAMI to register a strong FY21-23 CARG of 26.9%, while the management is hopeful for a double-digit YoY revenue and earnings growth in the remaining quarters of 2022.

Pending double bottom breakout. Technically, D&O is pending for a double bottom breakout. A successful breakout above the RM4.15 neckline will indicate a downtrend reversal and spur the price toward RM4.46-4.75-5.04 level. Cut loss at RM3.63.

Collection range: RM 3.79-3.85-3.97

Upside targets: RM 4.38-4.46-4.73

Cut: RM 3.63

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D&O：亮丽前景维持不变

数一数二的汽车 LED 制造商。通过其主要运营子公司 Dominant Opto Technologies Sdn Bhd，D&O 是全球汽车行业数一数二的表面贴装 LED 制造商。它以“DOMINANT”品牌提供全面的 LED 封装解决方案，以满足汽车内部和外部照明的需求。

中国汽车销售前景改善。作为全球最大的汽车市场，中国汽车工业协会已将中国 2022 年的汽车销量从 2750 万辆下调至 2700 万辆（按年增长 3%），因为中国实施严格的“零 covid-19”政策导致 1H22 的汽车销量低迷。尽管如此，中国 6 月份汽车销售乘用车数据强劲反弹至 222 万辆（按年增长 41%），这增长势头有望在政府刺激政策的帮助下延续至 22 年第三季度。其中包括将30万元以下的汽油车购置税减半至5%，为消费者提供以旧换新汽油车为电动汽车的补贴，以及一些城市扩大汽车保有量配额。

日益增长的 LED 运用。 D&O 的长期增长将受到车辆中 LED 使用量增加的支持。这体现在新推出的车辆上，现在以更大屏幕和多屏、内外应用的方式配备了更多的LED。这种趋势在电动汽车中更为明显，因为其设计更加时尚，配备了环境照明和更大的屏幕，具有更未来感的外观。例如，BMW ix 全电动 SUV 旗舰车型配备 14.9 英寸大型信息娱乐显示屏和 12.3 英寸数字仪表组。我们注意到，这种趋势也适用于当今的中档和大众市场的汽车。总而言之，市场共识预计 D&O 的核心 PATAMI 将录得 强劲 FY21-23 CARG 26.9%，而管理层则希望在 2022 年剩余季度实现双位数的同比收入和盈利增长。

等待双底突破。从技术上而言，D&O 正在等待双底突破。股价若成功突破 RM4.15 颈线将表明下跌趋势的反转，并将价格推向 RM4.46-4.75-5.04 水平。投资者可把止损设置在 RM3.63。

买入范围：RM 3.79-3.85-3.97

上行目标：RM 4.38-4.46-4.73

止损：RM 3.63

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