[Special Stock] DIC Receives Flood of Electric Vehicle Gearbox Orders from Hyundai and Tesla... Quarterly Profit in 4 Years

[Asia Economy Reporter Hyungsoo Park] DIC is showing strong performance. The news that Hyundai Motor Group is making a large-scale investment of about 8 trillion KRW in the United States over five years from this year to 2025, including starting electric vehicle production locally, appears to have influenced the stock price.

At 10:23 AM on the 14th, DIC was trading at 4,955 KRW, up 10.97% from the previous day.

Hyundai Motor Group announced the day before that it will invest a total of $7.4 billion (8.1417 trillion KRW) to secure future growth engines such as local electric vehicle production and expansion of production facilities, hydrogen, urban air mobility (UAM), robotics, and autonomous driving. This is interpreted as a proactive response to the Biden administration's strongly promoted 'Green New Deal' and 'Buy American' strategies and related electric vehicle policies.

DIC, a leading domestic electric vehicle (EV) reducer manufacturer, is a Hyundai Motor supplier. The order volume from Hyundai Motor, its key client, is showing a rapid increase trend. Hyundai Motor plans to increase EV production volume from 200,000 units last year to 350,000 units this year. All EVs produced by Hyundai Motor are equipped with reducers made by DIC. Therefore, DIC's order volume is expected to increase.

It is expected that DIC will additionally receive orders for about 200,000 electric vehicles from the U.S. electric vehicle company Tesla. According to the automotive industry, Tesla recently hinted at the possibility of placing an additional order for 200,000 EV reducers from DIC. If the order is finalized, it will be an additional order following the agreement to supply 200,000 units annually. Once the final decision is made, DIC will supply 400,000 EV reducers annually to Tesla.

A DIC official said, "As the U.S. consumer economy improves, the production volume of electric vehicles is increasing, and the order volume is also on the rise," adding, "A certain U.S. electric vehicle company has expressed an intention for additional orders, and it is currently under internal review."

Thanks to strong orders, DIC is rapidly improving its performance after a long slump. According to the Q1 earnings announcement on the 10th, DIC turned to a quarterly profit on a consolidated basis for the first time in four years. Sales increased by 16.1% to 144.6 billion KRW compared to the same period last year (124.5 billion KRW), and net profit greatly improved from a 2.7 billion KRW loss to a 10.78242 billion KRW profit during the same period.

A DIC official said, "Orders for EV reducers and transmissions have been continuously increasing since last year," and predicted, "We expect to continue the trend of performance improvement."

Researcher Changmin Yoon of Shinhan Financial Investment explained, "DIC is a company that manufactures transmission parts for automobiles and heavy equipment," adding, "Its main products include transmission parts for vehicles and heavy equipment, EV reducers for electric vehicles, and SBW. Major clients include Hyundai Motor Group, GM, and a North American company T."