About a year ago DBS Vickers Securities said that Dream International's acquisition of its toy-marketing division, Dream Korea (DK), from its parent company would enable it to undercut its competitors, thereby increasing market share in the plush-toy industry, which was showing stagnant growth. Dream, the largest plush stuffed-toy maker in the world, should now be viewed as a toy marketing firm fully integrated with a cost-efficient manufacturing arm unrivalled by most competitors. It maintained its 'buy' recommendation, with a one-year price target of HK$2.28 to $2.74. Dream was trading at 10 times 2003 price/earnings (PE), when a reasonable PE range would be 10-12 times. Earnings per share for 2003 would be raised by 5.1 per cent to 196 cents and for 2004 by 11.5 per cent to 228 cents, assuming that the resulting goodwill of $107 million would be amortised over 15 years. After digesting DK, Dream could forego some of the margin earned by DK to win more production orders from customers at the expense of other suppliers. In April, Dream International said its net profit rose 6.6 per cent last year to $120.95 million, with turnover up 2.4 per cent to $931.84 million. The counter closed at $1.79 on Friday.