LS Securities said on the 5th that PharmaResearch posted an earnings shock due to a change in accounting standards and sluggish medical device sales. It said a rebound in the share price is possible when indicators of a growing market are confirmed in results. It maintained its Buy rating but lowered the target price to 5.6 million won. PharmaResearch's previous day's closing price was 439,500 won.
PharmaResearch posted revenue of 142.8 billion won and operating profit of 51.8 billion won in the fourth quarter of last year. Compared with the market consensus (average estimate), revenue fell short by 8% and operating profit by 20%, an earnings shock.
Researcher Cho Eun-ae at LS Securities said, "As the revenue recognition accounting standard for the medical device division changed from the aggregates recognition method that included existing marketing support funds to the net recognition method, about 5 billion won in revenue was deducted in the fourth quarter," and added, "Even taking into account the impact of the accounting standard change, the medical device division's revenue fell short of market expectations." Revenue for the medical device division was 83.2 billion won.
In the fourth quarter of last year, domestic sales of medical devices totaled 58.4 billion won. During the same period, foreigners' spending at dermatology clinics in Korea rose 75% from a year earlier to 383 billion won.
Cho said, "PharmaResearch's domestic medical device sales include products such as Rejuran as well as fillers and Conjuran, and domestic sales of Rejuran in the fourth quarter of last year are estimated to have increased by about 10% from the previous quarter," adding, "The investment point that domestic Rejuran sales are increasing on the back of strong inbound demand from foreigners remains valid."
However, Cho added that while foreigners' dermatology spending grew 28% from the previous quarter, the roughly 10% growth in domestic Rejuran sales was disappointing compared with market expectations.
Cho analyzed, "It will need to prove with 2026 revenue that this is not due to intensified competition in the domestic skin booster market."
This year's domestic medical device sales were forecast at 280.8 billion won, up 24% from a year earlier. Cho explained, "Because PharmaResearch holds an oligopoly in the skin booster market, which forms the basic foundation of package procedures that are a trend among foreign dermatology patients, domestic medical device sales are expected to continue benefiting from the growth of foreigners' dermatology spending."