Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Dreamtech Co Ltd / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/27531" target="_blank" data-smartkarma-citation="entities:27531:1">In</a> October 2018, <a href="https://www.smartkarma.com/entities/27531" target="_blank" data-smartkarma-citation="entities:27531:1">Dreamtech Co Ltd (192650 KS)</a> first provided its initial IPO prospectus but due to difficult market conditions, it withdrew its IPO last year. Dreamtech is trying to complete its IPO again this year for a listing in March. Established in 1988, Dreamtech makes modules and sensors for smartphones, auto vehicles, home appliances, and health care products. </li>
<li>
The bankers have reduced the IPO price range to 11,000 won to 13,000 won (from 13,400 won to 16,700 won previously). The mid-point of the IPO price range has been reduced by 20% versus its first try at the IPO in 4Q18. </li>
<li>The bankers used 15 companies including SEMCO and SimmTech as comparable companies to Dreamtech. The average P/E of the comps is 14.6x (based on the annualized net profit in 1Q-3Q18). The bankers then took the annualized net profit of Dreamtech in 1Q-3Q18 and applied this P/E multiple which resulted in an implied market cap of 540.5 billion won or implied price of 17,286 won. After applying an additional 24.7% - 36.3% IPO discount, this resulted in the IPO price range of 11,000 won to 13,000 won. </li>
</ul>



In October 2018, Dreamtech Co Ltd (192650 KS) first provided its initial IPO prospectus but due to difficult market conditions, it withdrew its IPO last year. Dreamtech is trying to complete its IPO again this year for a listing in March. Established in 1988, Dreamtech makes modules and sensors for smartphones, auto vehicles, home appliances, and health care products. 

The bankers have reduced the IPO price range to 11,000 won to 13,000 won (from 13,400 won to 16,700 won previously). The mid-point of the IPO price range has been reduced by 20% versus its first try at the IPO in 4Q18. 
The bankers used 15 companies including SEMCO and SimmTech as comparable companies to Dreamtech. The average P/E of the comps is 14.6x (based on the annualized net profit in 1Q-3Q18). The bankers then took the annualized net profit of Dreamtech in 1Q-3Q18 and applied this P/E multiple which resulted in an implied market cap of 540.5 billion won or implied price of 17,286 won. After applying an additional 24.7% - 36.3% IPO discount, this resulted in the IPO price range of 11,000 won to 13,000 won. 


Dreamtech: Trying for an IPO Again at a Lower Price

<ul>
<li>
<a href="https://www.smartkarma.com/entities/27531" target="_blank" data-smartkarma-citation="entities:27531:1">Dreamtech Co Ltd (192650 KS)</a> is an IPO in Korea which is expected to be completed in November 2018. Established in 1988, Dreamtech makes modules and sensors for smartphones, auto vehicles, home appliances, and health care products. The IPO price range is between 13,400 won to 16,700 won. The company is expected to raise between US$76 million to US$94 million in this IPO.</li>
<li>The bankers used 20 companies including SEMCO, SimmTech, and Rayence as comparable companies to Dreamtech. This is a bit unusual since the bankers typically use only about three to six companies as comparables. The average P/E of the comps is 19.3x (based on the annualized net profit in 1H18). The bankers then took the annualized net profit of Dreamtech in 1H18 and applied this P/E multiple which resulted in an implied market cap of 657.9 billion won or implied price of 20,032 won. After applying additional 16.6% to 33.1% IPO discount, this resulted in the IPO price range of 13,400 won to 16,700 won.</li>
<li>The company has a record of sporadic sales and profits growth in the past several years. For example, the company's sales declined 22.5% YoY in 2015 but increased strongly in 2016 and 2017. Its sales declined slightly by 2.5% YoY in 1H18. </li>
</ul>



Dreamtech Co Ltd (192650 KS) is an IPO in Korea which is expected to be completed in November 2018. Established in 1988, Dreamtech makes modules and sensors for smartphones, auto vehicles, home appliances, and health care products. The IPO price range is between 13,400 won to 16,700 won. The company is expected to raise between US$76 million to US$94 million in this IPO.
The bankers used 20 companies including SEMCO, SimmTech, and Rayence as comparable companies to Dreamtech. This is a bit unusual since the bankers typically use only about three to six companies as comparables. The average P/E of the comps is 19.3x (based on the annualized net profit in 1H18). The bankers then took the annualized net profit of Dreamtech in 1H18 and applied this P/E multiple which resulted in an implied market cap of 657.9 billion won or implied price of 20,032 won. After applying additional 16.6% to 33.1% IPO discount, this resulted in the IPO price range of 13,400 won to 16,700 won.
The company has a record of sporadic sales and profits growth in the past several years. For example, the company's sales declined 22.5% YoY in 2015 but increased strongly in 2016 and 2017. Its sales declined slightly by 2.5% YoY in 1H18. 


South Korea

Dreamtech Co., Ltd. manufactures and distributes phone parts. The Company develops and sells smart phone fingerprint modules, smart phone side modules, and other related products. Dreamtech also produces automotive light emitting diode, sensors, home appliance essential modules, and other products.

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Dreamtech Co Ltd (192650 KS)

Dreamtech: Trying for an IPO Again at a Lower Price

In October 2018, Dreamtech Co Ltd (192650 KS) first provided its initial IPO prospectus but due to difficult market conditions, it withdrew its...

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Dreamtech IPO Preview (Part 1)

Dreamtech Co Ltd (192650 KS) is an IPO in Korea which is expected to be completed in November 2018. Established in 1988, Dreamtech makes modules...

Douglas Kim

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