MIDF said after visiting D&O Green Technologies Bhd plants have come back feeling reaffirmed on the outlook of the company.
The company which is involved in the automotive lighting segment is set to benefit from the growing demand, and its application of LED continues to be robust. The future trend of automotive displays will be full-width displays on the dashboard. According to the management, the new full-width display trend will require almost 15x (approximately 1,000 LEDs) as compared to the current small single displays in a car that usually comprise 60-80 LEDs.
While edge-lit displays remain to be the most common displays in cars, technological innovation has allowed direct-lit displays to penetrate the market. This will then require more LED installations. Looking at these emerging adoptions, MIDF is reaffirmed that D&O bodes well to capture the growing LED applications.
Management stated that even though the smart LED sales are minimal to the Group’s topline, the production of smart LED is expected to grow rapidly and contribute around 10% to the group’s revenue in 2023. This is well supported by the increasing average selling price as well as higher production of smart LED in Plant 1 since 2Q2022. The research house believes these two factors will help to improve margins more than the current levels. Original brand manufacturer (OBM). D&O as an OBM allows the company to retain its position as top five worlds LED manufacturers despite only operating one plant.
According to the management, Plant 2 is underway to be fully utilized in 2025. Apart from that, being an OBM allows the company to have a wide customer base to a level where no single customer accounts for more than 10% of the Group’s revenue. 70-80% of the company’s revenue is derived from its top 30 customers.
