This article first appeared in The Edge Financial Daily, on September 30, 2015.
D&O Green Technologies Bhd (+ve)
SEMICONDUCTOR components manufacturer D&O (Fundamental: 0.75/3, Valuation: 0.60/3) triggered our momentum alert for the third consecutive day yesterday.
On Monday, the company announced that Epistar, a Taiwan-based LED and chips manufacturer, plans to subscribe to 11,000,000 new shares or a 10% stake in its subsidiary — Dominant Opto Technologies Sdn Bhd (DOT) — for RM64.85 million in cash.
The proposed exercise, representing a strategic collaboration between D&O and Epistar, will raise DOT’s net assets per share by 35.88% to RM1.746.
Proceeds from the share sale will be utilised for DOT’s working capital purposes. Expected to complete by mid-November 2015, the sale will reduce D&O’s equity interest in DOT to 61.84%.
Currently 68.71%-owned by D&O, DOT is involved in the manufacturing of opto semiconductor components, mainly LEDs. For 2014, DOT posted a net profit of RM7.3 million and had net assets of about RM127.22 million as at end-December 2014.