Dream released its results on 25 Aug.
As the results presentation by management is on 1 Sept, i had decided to wait for it.
I will write the conclusion first. 1H 25 Results Poor but 2H 25 should be great and should matter more.
Why is 1H 25 Results Poor?
Revenue Increase of 12%. Frankly speaking i was expecting 20-30% but that is me, i think it might be difficult to ramp up so quickly.
Barring that other income swing (forex effect, results is poorer.
Takeaways from Results Presentation and 2H 2025 view.
-1H 2025 Revenue affected by some customers pushing back and moving orders to 2H as a result of the tariff situation
-However, currently pricing pressures not as severe and tariffs cost not bared by Dream.
-Management mentioned that 2H this year is 'very strong at the moment'
-1st Indonesia Factory is progressing better than management expectation. No impact from recent strikes.
-Lots of discussions with various customers from Japan, US , China etc. Recent tariff on India has also promped more discussions by customers who source from there.
-2nd Indonesia Factory and New Vietnam Factory will come hopefully come online for 2H 26.
-Maintain a stance of more growth next year due to increased capacity. But once again mentioned that revenue and margin increase can come from productivity improvements.
-Might look at increasing factory for Plush in China well given current demand remains strong.
- Build a Bear a major customer, still seeing positive order flow for Asian Theme Park Plush, believes that some effects of ramping up can be mitigated in 2H 2025.
- Unofficially said that there is around 40k workers at the moment, non peak period ideal amount would be 25k to 30k. As of 1H 25, there was 28.6k workers. Therefore, this is around 35% increase.
Conclusion
I would want to monitor and see how strong 2H might be. Will probably continue to monitor the export trends, theme park trends, customer revenue and inventory.
They have increased a lot of customers so it remains to be seen how well they ramp up.
Given that i believe 2H Revenue should be the highest in history(current record 3.41b), i believe current price of 13.28 represents decent value as it is probably a PE of 10-11 or maybe even lower if productivity and margin improvement kicks in.
For my own portfolio , as of now, i will keep it at around 20% to 40% allocation for now.
This might change based on prevailing business conditions and various data as data is released in the following months.
