[Edaily Reporter Park Jeong-soo] On the 5th, Kiwoom Securities upgraded its investment rating on #DreamTech from “Outperform” to “Buy,” citing increased visibility into the performance of its Indian memory module business and expectations for a rebound in earnings in the second half of the year. The firm set a target price of 7,000 won. The closing price on the 4th was 4,770 won.
Oh Hyun-jin, an analyst at Kiwoom Securities, assessed, “The recent decline in the stock price was largely due to poor earnings and delays in the performance of new businesses in India,” adding, “As the visibility of the memory module business’s performance improves, it is time for market expectations regarding new businesses to be reflected again.”
DreamTech’s first-quarter revenue this year was 260.7 billion won, a 24% decrease year-over-year, while operating profit fell 96% to 400 million won. The smartphone components (IMC) division underperformed due to the base effect from last year—when North American clients proactively built up inventory—and pressure from falling unit prices. Lower operating rates at the Indian subsidiary and delays in orders for subsidiary Cardiac Insight also weighed on earnings.
However, the company expects its memory module business in India to gain momentum starting in the second half of the year. DreamTech has completed the initial mass production of server RDIMMs, desktop UDIMMs, and laptop SODIMMs at its Indian factory and is currently working to diversify its customer base.
Analyst Oh Hyun-jin stated, “We expect full-scale mass production to begin by the end of the third quarter,” adding, “Based on full capacity at the Indian plant, annual memory module production capacity is estimated to exceed 200 billion won.”
Kiwoom Securities projected DreamTech’s revenue for this year at 1.2388 trillion won and operating profit at 41.6 billion won. This represents increases of 1% and 33%, respectively, compared to last year. The firm also anticipated that the performance of affiliated companies would gradually improve.
Analyst Oh stated, “Thanks to the recent expansion in memory demand, efforts to secure potential clients are proceeding smoothly,” and predicted, “We expect a performance trend of a strong second half driven by improved production efficiency and increased utilization rates at the Indian subsidiary.”