[Post IPO] Dreamtech, New Business Growth Alongside Profitable Subsidiary

[Asia Economy Reporter Yoo Hyun-seok] Dreamtech, a module specialist company, improved its performance thanks to the camera module company Namu-ga, which it acquired last year. This year, with the recovery of the front-end market, the situation in the core module sector is also improving. Positive results are expected in the healthcare business as well.

According to the electronic disclosure system DART on the 30th, Dreamtech recorded consolidated sales of 349.7 billion KRW and operating profit of 25.6 billion KRW in the first quarter. Compared to the same period last year, sales increased by 103.76% and operating profit surged by 1364%.

Dreamtech, which was listed on the KOSPI in 2019, had stagnant performance for several years. It recorded consolidated sales of 601.5 billion KRW in 2018 and 616 billion KRW in 2019. However, last year sales sharply increased to 1.0458 trillion KRW.

The consolidated subsidiary Namu-ga played a key role. Dreamtech became the largest shareholder by acquiring a 27.97% stake in the KOSDAQ-listed company Namu-ga in 2019. After the acquisition, it officially entered the Camera Module Solution (CMS) business. As of the first quarter, CMS recorded sales of 168.1 billion KRW, a 272.81% increase from 45.1 billion KRW in the first quarter of last year.

Although the subsidiary improved performance, the existing business results are also improving. Dreamtech's main business is IT & Mobile Communication (IMC), which develops and supplies various PBA modules used in IT devices. In addition, it operates the Biometrics, Healthcare & Convergence business (BHC), which develops biometric modules (fingerprint sensor modules) and convergence products, parts, and modules that combine traditional products with IT technology, and the Automotive Electronics & Sensors business (AES), which develops automotive electronic parts and optical sensors.

In the first quarter, IMC, BHC, and AES recorded sales of 94.9 billion KRW, 65.1 billion KRW, and 21.5 billion KRW respectively, increasing by 46.73%, 57.43%, and 5.5% compared to the same period last year. The increase in smartphone sales by client companies led to sales growth in the IMC and BHC sectors, which are related to smartphone components.

A company official said, "Mass production sales have started in the healthcare business," adding, "This, along with the turnaround to operating profit of the consolidated subsidiary Namu-ga acquired last year and the recovery of the smartphone market of major clients, influenced the results."

According to FnGuide, securities firms forecast Dreamtech's sales and operating profit this year to be 1.2572 trillion KRW and 84.3 billion KRW respectively, representing increases of 20.21% and 327.92% compared to the previous year. Growth is expected in the second half of the year in the existing business as well as in the medical device segment of the BHC business.

Since 2015, Dreamtech has jointly developed wireless electrocardiogram (ECG) sensors with the US company LifeSignals, replacing wired ECG sensors. In 2018, it received approval from the US FDA for wireless biosensors and began supplying initial mass production volumes from the fourth quarter of the same year. Notably, the wireless ECG sensor product 1Ax received US FDA approval. The next product, 2A, is also in the development stage.

A company official explained, "We expect the sales of 'Biosensor,' the product with the largest sales proportion in the healthcare business, to become full-fledged in the second half of the year," adding, "We are expanding the production line to respond to the mass production sales of 1Ax in the second half, and expect sales to more than double next year."

He continued, "Since Stryker's acquisition of Orthosensor, demand for sensors used in knee joint surgery has also increased, so sales growth is expected in the second half," but added, "Overall, due to global semiconductor supply issues and the spread of the Delta variant, uncertainty is high, making it difficult to forecast second-half performance."

Dreamtech is a module specialist company that supplies IT components in modular form. It is a first-tier supplier that purchases raw materials such as flexible printed circuit boards (FPCB) and components from second-tier suppliers and manufactures modules or parts for delivery. It supplies various modules and parts to smartphone Galaxy S and Note series and undertakes contract manufacturing of products and finished goods. It was listed on the KOSPI in 2019.