D&O: Bullish Breakout26th September 2018
D&O broke above the line connecting its recent high at RM0.80 yesterday. With this upside breakout, the stock is likely to go into an upleg. The potential target is RM1.00. This breakout would be invalid if the share price were to brop back below RM0.80.
Chart: D&O’s weekly chart as at September 25, 2018_12.30 (Source: Malaysiastock.biz)
Recent Quarterly Result
In QE30/6/2018, net profit rose 58% q-o-q or 119% y-o-y to RM8.1 million while revenue was unchanged q-o-q but rose 11% y-o-y to RM113 million. Pre-tax profit rose 19.5% to RM11.8 million, lifted by a RM2.2 million government grant, a RM3.2 million net gain from the settlement of a civil suit (refer the note below) and RM0.7 million foreign exchange gain (versus RM1.6 million loss in QE31/3/2018), which partially offset by higher inventory write offs and higher R&D expenses (which doubled to RM8.9 million from RM4.4 million).
Note: D&O lost a suit in the Melaka High Court in May 2018. The suit was brought by Geepar Enterprise Sdn Bhd where the judgement awarded was RM18,964,923.38. Subsequently, D&O accepted an offer of a full and final settlement amount of RM10,156,000, including cost, from Geepar Enterprise Sdn Bhd.
Graph: D&O’s last 14 quarterly results
D&O (closed at RM0.84 in the morning session) is now trading at a trailing PER of 31 ttimes (based on last 4 quarters’ EPS of 2.65 sen). At this PER, D&O is deemed fully valued.
Based on bullish technical breakout, D&O could be a good trading BUY.
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