MIDF RESEARCH is a unit of MIDF AMANAH INVESTMENT BANK

Kindly refer to the last page of this publication for important disclosures

21 August 2017 | Initiate Coverage

D&O Green Technologies Berhad Initiate with NEUTRAL

Auto lighting to dominate growth prospects Target Price (TP): RM0.66

INVESTMENT HIGHLIGHTS

• Shifting to a higher production gear

• Better margins with higher auto contribution

• However, much of the positives have been priced in

• Initiate with NEUTRAL and TP of RM0.66

Business Overview:

D&O Green Technologies Bhd (D&O) manufactures and markets light

emitting diode (LED) products under the brand Dominant. Almost all

its products are exported while D&O has six sales offices worldwide.

Investment Theses:

1. Shifting to a higher production gear. D&O’s current plant

utilisation rate has increased to 70% to 80% from 60% to 70% in

the previous quarter, indicating that the company is getting busier

in fulfilling customers’ orders. It has also acquired a new plant

earlier this year that will allow the company to double the current

production capacity upon completion in 2023.

2. Margins should improve as automotive segment

contributes more. In the past three years, the company decided

to pare down its general lighting sales to focus more on

automotive lighting. General lighting segment accounted for 50%

of sales in 2014 and has since been reduced to less than 10%

now. Inversely, automotive lighting is main income contributor.

Since then, its gross profit margin has also improved from 15% in

FY14 to 25% as at 1Q17.

3. 4-year profit CAGR of 40%. From FY15 to FY18F, D&O’s net

profit CAGR is expected at 40%. We expect PAT to grow by 74%

in FY17F and another 37% in FY18F as the company continues to

fulfil orders from its customers. This is also helped by the higher

margins from automotive LED lighting. Growth in demand will

come from the wider application of LED and the overall growth in

the automotive industry.

4. However, much of the near-term positives have been

priced in. While we like D&O’s growth catalysts, we believe that

its current valuation is considerably high as its share price has

more than doubled year-to-date. We reckon that the company will

only experience another high growth from FY19 onwards.

Initiate with NEUTRAL and TP of RM0.66. This is based on PER

of 25x pegged on FY18F EPS of 2.6 sen. The 25x PER is a slight

discount to the average PER of global lighting players such as Phillips

and Osram, which stands at 27x.

RETURN STATS

Price (18th Aug 2017) RM0.61

Target Price RM0.66

Expected Share Price

Return +8.3%

Expected Dividend Yield +1.3%

Expected Total

Return +9.6%

STOCK INFO

KLCI 1,776.22

Bursa / Bloomberg 7204/ DOGT MK

Board / Sector Main/ Technology

Syariah Compliant Yes

Issued shares (m) 998.52

Market cap. (RM’m) 609.10

Price over NTA 3.61

52-wk price Range 0.29-0.74

Beta (against KLCI) 0.44

3-mth Avg Daily Vol 2.73

3-mth Avg Daily Value 1.73

Major Shareholders (%)

PRT Capital Pte Ltd 16.18

Keen Capital Investments 15.37

Omega Riang Sdn Bhd 11.30

Price Performance (%) Absolute Relative

1 month -0.8 -2.0

3 months -2.4 -4.4

12 months 71.8 64.0

MIDF RESEARCH Monday, 21 August 2017

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INVESTMENT STATISTICS

FYE Dec FY14 FY15 FY16 FY17F FY18F

Revenue (RM’m) 421.3 433.1 430.1 481.7 573.2

Pretax Profit (RM’m) 5.3 19.0 29.6 39.5 53.3

Net Profit (RM’m) 0.7 10.2 11.3 19.7 26.9

EPS (sen) 0.1 1.0 1.1 1.9 2.6

EPS growth (%) 81 1298 9 74 37

PER (x) 833.5 59.6 54.8 31.5 23.1

Net Dividend (sen) N/A N/A N/A 0.6 0.8

Dividend yield (%) N/A N/A N/A 1.0 1.3

Gearing (x) 0.35 0.23 0.17 0.18 0.19

ROE (%) 0.5 5.5 5.7 9.1 11.0

ROA (%) 0.2 2.3 2.4 3.8 4.5

NTA per share (RM) 0.10 0.16 0.17 0.19 0.21

Price to NTA (x) 5.8 3.9 3.6 3.3 2.8

Source: Company, MIDF Research

Source: Bloomberg

DAILY PRICE CHART

Ng Bei Shan ng.bs@midf.com.my

03-2173 8461

MIDF RESEARCH Monday, 21 August 2017

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A. KEY INVESTMENT THESES

Strategic plans to move up the ladder. Based on sales estimation, D&O currently ranks fifth in the market but

aims to move up to the top three by 2021. It positions itself as a one-stop automotive LED supplier with a full range of

products to compete with other global brands. In the near term, the company plans to further expand its exterior

lighting products for the automotive industry as its current main products are for interior lighting. Also in the pipeline,

the company is developing the System Integrated Package (SIP), which is a combination of LEDs and integrated circuit

that can help it differentiate its offering further. We are positive on the company’s plans to provide improved and

unique products which will potentially garner better profit margin in the future. We believe this is possible as the

company usually invests 3% to 4% of its revenue into research and development activities. Its vision will be supported

by introduction of new products, market expansion and higher production capacity.

Wide market coverage. Almost all of D&O’s products are exported to the world’s biggest automobile markets across

various continents. D&O works with tier-two and tier-one automotive suppliers who ultimately serve major automotive

brands. Over the years, the company has set up sales offices in key automotive markets to serve its customers. Out of

Malaysia, it has offices in Detroit, USA; Bad Rappenau, Germany; Yokohama, Japan; Seoul, Korea; Shanghai, China

and Chennai, India. Asia is D&O’s biggest market, contributing about 70% to the group’s total sales in the past few

years. This is followed by Europe, averaging at 18% and USA at 6%. Management noted that USA is a market with

room for improvement due to the huge automotive market in North America. According to the International

Organization of Motor Vehicle Manufacturers (OICA), USA is the second largest automotive producer in the world after

China.

Exhibit 1: Top vehicle producers in the world by countries in 2016

Source: OICA

Improving on efficiency and capabilities. By phasing out its general lighting segment to focus on the higher

margin auto lighting segment, it will be able to rearrange its machines so that it can free up spaces to improve

operational efficiencies. Notably, its EBIT margin has improved from 2.4% in FY14 to 7.2% in FY16. Its 1Q17 EBIT

margin has further improved to 7.4%. The company also designs and makes some of its machines in-house. It plans to

further automate some of its manufacturing processes while it aims to adopt more auto vision. Its new machines are

expected to reduce headcount and improve space utilisation. It also has in-house complete reliability laboratory, burn-

in capabilities and complete failure analysis capabilities to test its products.

0

5

10

15

20

25

30

China United States Japan Germany India South Korea

Top vehicle producers in 2016 ('mil units)

MIDF RESEARCH Monday, 21 August 2017

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Production capacity expansion plans to meet higher orders. The company has acquired the adjacent factory

for RM11m in early 2017 as it prepares to ramp up its production capacity to meet sales growth up to 2025. It plans to

shift its office to the new building in the second half of 2018 if works on renovation adhere to the timeline planned.

The reshuffling in plan layout of its existing plants is expected to free up space that will allow for the company to

increase production capacity by about 50% in end-2018. Following the first phase of its expansion plan, management

targets to carry out the remaining capacity enlargement progressively up to 2023. Ultimately, the new plant is

expected to double the capacity of its existing plant post restructuring the existing plant’s layout.

Fine-tuning product mix. Besides its shifting of focus to automotive lighting, D&O is also looking into enhancing its

product mix, in which we expect to contribute favourably to its future earnings. We understand that D&O’s main

income is from interior lighting. We anticipate for exterior lighting contribution to increase significantly due to the shift

in trend for the overall auto industry. Following which, we also expect for exterior lighting, which generally commands

higher ASP, to contribute at a higher percentage to D&O’s sales in the next two years. It offers very comprehensive

product range for automotive lighting, which is on par with the world’s top LED makers. Its tier end customers include

all the major global automotive brands. It serves end customers for the high-end niche market to the mass market

makes. All the major German, European and Japanese leading brands are its end customers.

Exhibit 2: Examples of D&O’s products and application in the interior of a car

Source: Company

Stronger ringgit may dampen top and bottomline. D&O derives almost all its sales in foreign currencies as most

of its products are exported. Its highest receipts are in USD at 60%, followed by renminbi at 25% and euro at 15%. A

stronger ringgit against these three major currencies that D&O receives its sales in will affect its revenue and profit.

Concentration of one single industry may also pose risk in the event of shift in trends in the automotive industry.

While D&O’s margins have improved in the past few years as it phased out the general lighting segment, there is also

a concentration risk as it now relies heavily on the automotive industry only. That said, this is mitigated by its wide

geographical sales that could cushion any slowdown in a particular market. The increasing usage of LED in the

automotive industry also provides plenty of opportunities for D&O.

Valuations are a bit stretched for now. While we like D&O’s growth catalysts, we believe that much of the near-

term positives have been priced in. Note that its share price has more than doubled year-to-date. We reckon that the

company will only experience another high growth from FY19 onwards. This is premised on the two to three year cycle

of the new designs for cars as well as a higher production capacity from the office relocation expected in 2HFY18.

MIDF RESEARCH Monday, 21 August 2017

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B. FINANCIAL HIGHLIGHTS

EBIT margin climbing up. D&O’s EBIT margin has improved from 2.4% in FY14 to 7.2% in FY16. Its 1Q17 EBIT

margin is also improving to 7.4% as the company shifts its focus to automotive lighting from a mix of general and

automotive to only automotive products. We expect further margin enhancement going forward as the company’s

production efficiency improves due to volume alongside with better product mix going forward. We expect EBIT margin

to improve to 8.4% in FY17F and 9.9% in FY18F.

The second half is usually stronger than the first half. D&O has recorded its strongest Q1 revenue and net profit

in FY17. We do not expect a much stronger sequential quarter as it phases out its general lighting, which could result

in a lower topline qoq. That said, we do anticipate for sales and net profit to pick up again in the second half. In FY15

and FY16, PAT in the first half makes up less than 45% of the full year net profit. Similarly, we expect 2HFY17 to be

stronger than 1HFY17.

Wider customer base and product offering bode well for earnings outlook. Based on the investment theses

discussed, we expect D&O’s sales to improve by 12% in FY17F and 19% in FY18F. We expect higher growth in

bottomline due to the higher margins fetched by automotive products, hence PATAMI is expected to jump by 74% in

FY17F and 37% in FY18F. We also expect profit margin to improve in tandem with EBIT margin. Due to the new

products in the pipeline, high capex and R&D expenditure, we expect D&O’s effective tax rates to come below

statutory rates.

Exhibit 2: D&O’s revenue and profit trend

Source: Company, MIDF Research

Healthy balance sheet and cashflow. We expect the company to further improve its gearing level as its operating

cashflow strengthens. We expect for the company to turn into net cash position in FY17F and FY18F. We estimate that

operating cashflow to improve from RM45.5m in FY16 to RM50.5m in FY17 and RM55.6m in FY18F. The stronger

balance sheet will also allow the company to pay out dividends going forward.

Expect regular dividends as earnings improve. The company has paid out a first interim dividend of 0.5 sen in

July. This is the first dividend paid since FY08. We are positive on the dividend payout as the company starts rewarding

its shareholders again after sales and profit showed continuous growth in the past four years. We estimate a 31%

payout for FY17F, which should bring full year DPS to 0.6 sen, giving a yield of 1.0%. For FY18F, we also estimate a

similar payout ratio of 30% or DPS of 0.8 sen. That will give a yield of 1.3%. We expect the company to balance

between rewarding shareholders and reserving cash for the future expansion of its new plant.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

FY14 FY15 FY16 FY17FFY18F

%

RM

'm Revenue

PATAMI

Profit margin

MIDF RESEARCH Monday, 21 August 2017

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C. INDUSTRY OUTLOOK

Proxy to the growth in auto lighting. As D&O now derives more than 90% of its sales from auto lighting, we

expect the wider application of LED lighting for the automotive industry is a positive point for D&O. According to a

Grand View Research, automotive LED market is expected to grow at a compounded annual growth rate of 12% from

2015 to 2022. The growth is supported by the increasing usage of LED for vehicle interior and exterior lighting as well

as higher global sales volume. We believe that our sales growth assumption of 12% for D&O in FY17F and 19% in

FY18F to be almost in-line with the global market growth. We also view the stringent processes of being a qualified

auto parts supplier as a barrier of entry for other generic LED manufacturers. This is due to the safety requirements for

the auto industry.

LED trend should persist as auto makers build greener and safer cars. LED has become the preferred lighting

technology over the years due to its energy efficiency, durability and flexibility. The improvement in LED technology

has also brought down the costs of LED lighting, which makes it a cost effective product too. Moreover, more stringent

road safety regulations such as the requirement of daytime running lamp being equipped in vehicles will increase

demand for LED lighting. The demand for LED lighting is expected to increase once such requirements are made in

developing countries as most countries that impose this regulation are developed nations.

D. VALUATION

Initiate with NEUTRAL and TP of RM0.66. This is based on PER of 25x pegged on FY18F EPS of 2.6 sen. The 25x

PER is a slight discount to the average PER of global lighting players such as Phillips and Osram, which stands at 27x.

Based on Bloomberg data, D&O’s semiconductor peers that include Globetronics and Unisem are trading at an average

PER of 39x. Meanwhile, global lighting companies that include Osram and Phillips are trading as an average PER of

27x. Taking all these into consideration, we decide to use 25x PER due to D&O’s smaller size and niche position in the

auto LED market. It is also the only listed company on Bursa with such a positioning as other semiconductor players

listed on Bursa manufactures different products.

E. RISKS

Rapid shift in technology. The introduction of new lighting technology that is more cost effective than LED is likely

to change the landscape that D&O operates in. The improvement in technology also generally leads to lower ASPs,

price and margin erosion especially for the older range of products. The inability for the company to change with the

new trends may result it in falling behind competition. That said, the company has an R&D team and looks into new

machines and products while it allocates 3% to 4% of its sales for R&D purposes.

Huge swing in forex movement. As D&O derives most of its income from export sales, a stronger ringgit against

some major currencies it trades in will impact its top and bottomline adversely. The company tries to mitigate its forex

risks by being exposed to several major currencies namely USD, renminbi and euros. The company receives 60%, 25%

and 15% of its income in these currencies respectively. We believe that this diversification reduces its risks from being

too reliant on the movement of a single currency, hence cushioning it from a single currency risk.

Foreign labour issues. The company currently hires a few hundred foreign workers. Any unfavourable change in

policies in regards to foreign labour will adversely impact its operational costs. A severe shortage in foreign labour

supply can also reduce its productivity. The company aims to mitigate this risk through more automation and reduction

in laborious headcount by using more advance machineries.

MIDF RESEARCH Monday, 21 August 2017

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Source: Company, MIDF Research

Income statement (RM'm) 2014 2015 2016 2017F 2018F Balance sheet (RM'm) 2014 2015 2016 2017F 2018F

Revenue 421.3 433.1 430.1 481.7 573.2 Assets

Property, plant and equipment 117.8 130.4 153.7 167.3 191.4

EBITDA 32.5 46.0 57.7 71.0 88.8 Investment in an associate 12.1 0.0 0.0 0.0 0.0

EBIT 10.1 23.0 30.9 40.6 54.7 Other investments 11.2 27.4 25.8 25.8 25.8

Intangible assets 4.9 4.1 3.2 2.4 1.5

Profit before tax 5.3 19.0 29.6 39.5 53.3 Goodwill 24.2 24.2 24.2 24.2 24.2

Taxation (1.6) (1.4) (8.5) (5.5) (6.9) Total non-current asset 170.2 186.2 206.9 219.7 242.9

Non-controlling Interest (NCI) (3.0) (7.3) (9.8) (14.3) (19.5)

Profit after tax & NCI 0.7 10.2 11.3 19.7 26.9 Inventories 96.5 106.9 116.6 129.1 152.0

EPS (sen) 0.1 1.0 1.1 1.9 2.6 Trade & other receivables 66.0 92.2 99.9 109.7 128.9

Others 0.4 0.6 0.6 0.6 0.6

EBIT margin (%) 2.4 5.3 7.2 8.4 9.5 Cash & cash equivalent 29.2 60.3 43.3 59.1 68.7

Profit before tax margin (%) 1.5 4.4 6.9 8.2 9.3 Total current asset 192.1 260.0 260.3 298.4 350.1

Profit after tax & NCI margin (%) 0.2 2.4 2.6 4.1 4.7

Total assets 362.3 446.2 467.3 518.1 593.0

Cash flow (RM'm) 2014 2015 2016 2017F 2018F

Operating cash flow Equity

Profit before tax 5.3 19.0 29.6 39.5 53.3 Share capital 101.1 103.8 104.9 104.9 104.9

Depreciation of PPE 21.3 22.4 26.3 29.7 33.2 Reserves 33.0 81.4 92.4 112.1 139.0

Amortisation of government grant -0.3 -0.3 -0.3 -0.1 0.0 Shareholder's funds 134.1 185.2 197.3 217.0 243.9

Amortisation of intangible assets 0.8 0.8 0.8 0.8 0.8 Non-controlling interest 42.9 82.6 91.1 105.3 124.8

Dividend income (0.1) (0.3) (0.6) (0.7) (0.7) Total equity 177.0 267.8 288.4 322.3 368.7

Interest expense 2.6 2.6 1.9 2.3 2.7

Interest income 0.0 -0.1 -0.5 -0.6 -0.7 Liabilities

Others 7.9 (12.5) 10.8 (0.0) (0.0) Long term borrowings 0.2 0.2 5.9 7.1 8.3

OP before ∆ in WC 37.5 31.6 68.1 71.0 88.8 Deferred income 0.7 0.4 0.1 0.0 0.0

∆ in working capital Others 0.1 0.2 7.0 5.1 5.0

Inventories 0.2 (10.6) (16.8) (12.5) (22.9) Total non-current liabilities 1.0 0.8 13.0 12.2 13.3

Receivables 6.1 (26.9) (7.4) (9.8) (19.2)

Payables (11.2) 1.5 4.7 9.6 18.6 Trade & other payables 117.9 114.9 121.5 131.1 149.7

Cash from operations 32.5 (4.3) 48.5 58.3 65.2 Deferred income 0.3 0.3 0.3 0.3 0.3

Interest paid (2.6) (2.6) (1.9) (2.3) (2.7) Others 1.0 0.6 1.1 0.5 0.5

Income tax paid (0.9) (1.9) (1.2) (5.5) (6.9) Short term borrowings 65.1 61.7 43.0 51.8 60.6

Net CF to Operations 29.0 (8.9) 45.5 50.5 55.6 Total current liabilities 184.3 177.5 165.9 183.6 211.0

Total liabilities 185.4 178.3 178.9 195.8 224.3

Investing cash flow

Dividend received 0.1 0.3 0.6 0.7 0.7 Total equity & liabilities 362.3 446.2 467.3 518.2 593.0

Interest received 0.0 0.1 0.5 0.6 0.7

Purchase of PPE (23.3) (33.3) (54.6) (43.4) (57.3) Ratios 2014 2015 2016 2017F 2018F

Others (1.4) 0.4 14.6 0.0 0.0 Profitability ratios (%)

Net CF to Investments (24.5) (32.5) (39.0) (42.1) (56.0) Return on equity 0.5 5.5 5.7 9.1 11.0

Return on capital employed 5.0 9.3 12.5 14.7 17.5

Financing cash flow Return on asset 0.2 2.3 2.4 3.8 4.5

Net drawdown / (rpmt) of loans (5.3) 0.1 (14.2) 12.0 15.6

Dividends 0.0 0.0 0.0 (6.1) (8.1) Liquidity ratios (x)

Others 0.9 69.3 0.7 1.6 2.5 Current ratio 1.0 1.5 1.6 1.6 1.7

Net CF to Financing (4.4) 69.4 (13.4) 7.5 10.0 Quick ratio 0.5 0.9 0.9 0.9 0.9

Net cash changes 0.1 28.0 (6.9) 15.8 9.6 Growth ratios (%)

Exchange difference 0.4 4.1 (0.4) 0.0 0.0 Revenue 28.3 2.8 (0.7) 12.0 19.0

Beginning cash & cash equivalent 18.0 18.5 50.6 43.3 59.1 Earnings 82.8 n.m. 10.2 74.7 36.6

Ending cash & cash equivalent 18.5 50.6 43.3 59.1 68.7

MIDF RESEARCH Monday, 21 August 2017

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APPENDIX

I. Major Corporate Milestones

Year Event

1993

Formation of Omega, which focused on sub-contracting assembly work of metal-can products.

Eventually expanded the scope to include more product packages such as opto metal-can, fibre optic metal-can and LED lamps.

2000 The company focused on designing, developing and manufacturing optosemiconductor components

mainly light emitting diodes.

2003 It collaborated with German company sglux Solgel Technologies GmbH on the design of a packaging process for all types of metal-can UV sensors.

2004

It diversified into assembly of new OEM packages for the wireless semiconductor business segment.

D&O was incorporated as a public listed company on March 21, 2004 to become the investment holding company of Omega, Omega Semiconductor Technology Sdn Bhd and Omega Photonics

Packaging Sdn Bhd.

D&O was listed on the then second board of Bursa known as D&O Ventures Bhd

2006 The group started to shift its focus from OEM to OBM.

2008 It downsized its traditional contract manufacturing business following a review in business focus and direction.

2010

The group’s core businesses include LED component through 63.4%-owned Dominant Opto

Technologies Sdn Bhd, contract manufacturing through Omega and module group through a 25% associate TongFang Optoelectronic Ltd.

Incurred losses due to impairment charges from the change in business direction.

2014 The group continues to refine its business strategy and focus on automotive lighting while phasing out the highly competitive general lighting segment gradually.

Source: Company, MIDF Research

MIDF RESEARCH Monday, 21 August 2017

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II. Corporate Structure

Source: Company

MIDF RESEARCH Monday, 21 August 2017

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III. Management Profile

DATO’ MOHAMMED

AZLAN HASHIM Non-Independent and

Non-Executive Chairman Malaysian, 60, Male

Dato’ Mohammed Azlan Hashim was appointed as the Non-Independent Non-Executive

Chairman of D&O on 16 September 2004. Dato’ Azlan is also the Chairman of SILK Holdings Berhad, Scomi Group Berhad, Labuan IBFC Inc Sdn. Bhd and Universiti Malaysia

Terengganu. He is also a Deputy Chairman of IHH Healthcare Berhad. He also serves as a board member of, amongst others, Khazanah Nasional Berhad, Labuan Financial

Services Authority and Chairman of Kumpulan Wang Persaraan (Diperbadankan)

Investment Panel. He has extensive experience in the corporate sector, including financial services and investment. Positions that he has held include that of Chief

Executive of Bumiputra Merchant Bankers Berhad, Group Managing Director of Amanah Capital Malaysia Berhad and Executive Chairman of Bursa Malaysia Group. Dato’ Azlan

holds a Bachelor of Economics (Monash) and qualified as a Chartered Accountant (Australia). He is a Fellow Member of the Institute of Chartered Accountants, Australia,

Member of The Malaysian Institute of Accountants, Fellow Member of Malaysian Institute

of Directors, Fellow Member of the Institute of Chartered Secretaries and Administrators and Honorary Member of The Institute of Internal Auditors, Malaysia.

Dato’ Azlan holds a Bachelor of Economics (Monash) and qualified as a Chartered Accountant (Australia). He is a Fellow Member of the Institute of Chartered Accountants,

Australia, Member of The Malaysian Institute of Accountants, Fellow Member of

Malaysian Institute of Directors, Fellow Member of the Institute of Chartered Secretaries and Administrators and Honorary Member of The Institute of Internal Auditors, Malaysia.

TAY KHENG CHIONG

Group Managing Director

Malaysian, 53, Male

Tay Kheng Chiong was appointed as the Group Managing Director of D&O on 16

September 2004. He is a member of the Employees’ Share Option Scheme Committee.

Mr Tay graduated from the University of Sunderland, England with a Bachelor of Engineering (Honours) degree majoring in Electrical and Electronics in 1989. Upon

graduation, he joined a German multinational semiconductor company in 1989 as a Development Engineer and was promoted to Director of Manufacturing in 1999. In 1999,

he obtained a Masters of Business Administration from the University of Stratchclyde, Scotland. He is a registered Chartered Engineer with the Institution of Electrical

Engineers, United Kingdom. He has more than 25 years of experience in the opto

semiconductor industry. With his sound technical background and vast experience in the opto semiconductor industry, his forte lies in the management of the overall operations,

business development and strategic direction of the D&O Group. Mr Tay is also a director of Mega First Corporation Berhad (“MFCB”), a company listed on Main Board of Bursa

Malaysia.

CHEAM DAU PENG

Executive Director Malaysian, 64, Male

Cheam Dau Peng was appointed as an Executive Director of D&O on 16 September 2004.

Mr Cheam is a member of Employees’ Share Option Committee. Mr Cheam started his career as a Production Supervisor with a multinational semiconductor company

immediately after he completed his secondary school education. Backed by more than

twenty (20) years of experience in the semiconductor industry, he has vast hands-on experience in plant operations. Mr Cheam has been playing an active role in the growth

and expansion of the D&O Group since 2001.

MIDF RESEARCH Monday, 21 August 2017

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GOH NAN YANG Non-

Independent and Non-

Executive Director Malaysian, 54, Male

Goh Nan Yang was appointed as a Non-Independent Non-Executive Director of D&O on

16 September 2004. He is the Chairman of the Remuneration Committee and also

members of the Employees’ Share Option Scheme Committee and Nomination Committee. Mr Goh graduated from the University of Toledo with a Bachelor of Science

(Honours) degree in Engineering. He joined a public listed company after graduation, during which period he was involved in several major infrastructure and housing projects.

In the mid-1990’s, he left employment and started his own business in property

development and manufacturing activities in Melbourne, Australia. Since then, his business has diversified into hospitality and student education ventures. Mr Goh also sits

in the board of MFCB. He holds directorships in several private limited companies in Malaysia and overseas as well. Mr Goh is deemed to be interested in various transactions

between D&O Group and MFCB Group by virtue of his common directorships and deemed substantial shareholding in D&O and MFCB. Mr Goh is the brother-in-law of Madam Lim

Yam Chiew. Madam Lim is a deemed substantial shareholder of the Company. He has

attended

YEOW SEE YUEN Independent and Non-

Executive Director

Malaysian, 49, Male

Yeow See Yuen was appointed as an Independent Non-Executive Director of D&O on 4 February 2009. He is a member of the Audit Committee, Remuneration Committee and

Nomination Committee. Mr Yeow holds a first class honours degree in Accountancy from

the National University of Singapore. He started his career with Cooper & Lybrand in Singapore in the audit division. He left the firm in 1994 to join Deutsche Securities Asia

Limited (“Deutsche Securities”) where he spent 9 years working in the Equity Research Department. During the period, he progressed through a series of positions including

Deputy Head of Indonesia Research, Head of Malaysian Research and Head of Consumer

Research Asia. Since leaving Deutsche Securities in 2003, he has been actively involved in investment banking related work, including investor relations corporate advisory and

research consultancy. Mr Yeow is presently an Independent Non-Executive Director of MFCB and holds directorships in several private limited companies incorporated in

Malaysia and overseas.

WONG MENG TAK

Independent and Non-Executive Director

Malaysian, 69, Male

Wong Meng Tak was appointed as an Independent Non-Executive Director of D&O on 16

September 2004 and appointed as the Senior Independent and Non-Executive Director on 8 April 2013. Mr Wong is the Chairman of the Audit Committee and Nomination

Committee. Mr Wong obtained a Bachelor of Arts (Honours) degree majoring in

Economics from the University of Malaya in 1971. He began his career in 1971 with The Hongkong And Shanghai Banking Corporation Ltd. Malaysia and held various positions

within the bank. In 2002, he retired from the Bank as Senior Manager of Regional Credit.

JESPER BJOERN MADSEN

Independent and Non-Executive Director Danish,

63, Male

Jesper Bjoern Madsen was appointed as an Independent Non-Executive Director of D&O

on 21 August 2014. He is members of Audit Committee and Remuneration Committee of D&O. Mr Madsen obtained a Master degree in Law from Copenhagen University,

Denmark and later studied Scottish/English Law at the University of Edinburgh, Scotland. Mr Madsen has been working with the Carlsberg A/S Group for over 20 years. He was the

senior vice president of Carlsberg Breweries A/S with responsibility for Asia, among other markets. Mr. Madsen was during his tenure as the said senior president also a non-

executive chairman, non-executive vice chairman or non-executive director in a number

of Carlsberg’s subsidiaries in Asia. He has vast experience in overseas investments and markets.

MIDF RESEARCH Monday, 21 August 2017

12

LOW TEK BENG

Alternate director to

Cheam Dau Peng Malaysian, 46, Male

Low Tek Beng joined the Board on 16 September 2004 as the alternate Director to

Cheam Dau Peng. Mr Low obtained his first class honours Bachelor of Mechatronic

degree from the University of Leeds, United Kingdom in 1994. He began his career in that same year with a multinational semiconductor company as a Product Development

Engineer and was subsequently promoted to Product Development Manager before he left the company in 2000. Mr Low currently is the Chief Operation Officer in Dominant

Opto Technologies Sdn. Bhd., subsidiary of D&O.

Source: Company

MIDF RESEARCH Monday, 21 August 2017

13

MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (23878 - X).

(Bank Pelaburan)

(A Participating Organisation of Bursa Malaysia Securities Berhad)

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This report has been prepared by MIDF AMANAH INVESTMENT BANK BERHAD (23878-X) pursuant to

the Mid and Small Cap Research Scheme (“MidS”) administered by Bursa Malaysia Berhad. This report

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implied, as to the accuracy, completeness or reliability of the information contained therein and it

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MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS

STOCK RECOMMENDATIONS

BUY Total return is expected to be >15% over the next 12 months.

TRADING BUY Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been

assigned due to positive newsflow.

NEUTRAL Total return is expected to be between -15% and +15% over the next 12 months.

SELL Total return is expected to be <-15% over the next 12 months.

TRADING SELL Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been

assigned due to negative newsflow.

SECTOR RECOMMENDATIONS

POSITIVE The sector is expected to outperform the overall market over the next 12 months.

NEUTRAL The sector is to perform in line with the overall market over the next 12 months.

NEGATIVE The sector is expected to underperform the overall market over the next 12 months.