Kiwoom Securities said on the 3rd that KOSDAQ-listed Hugel is expected to recover profitability in the second half of this year and that the likelihood of raising its earnings forecasts has increased. It maintained a "buy (BUY)" rating and raised its target price to 360,000 won from 340,000 won. Hugel closed the previous session at 243,000 won.
Shin Min-su, a Kiwoom Securities researcher, said, "Costs related to noncommercialized batches that should have been reflected in the fourth quarter of last year are scheduled to be spread over the first and second quarters of this year, but they are already reflected in market expectations," and added, "We judge that results will recover in the second half when actual sales proceed, as ancillary expenses such as insurance costs from direct sales in the United States occur."
Kiwoom Securities forecast Hugel's first-quarter results this year at 108.8 billion won in revenue and 41.6 billion won in operating profit. Revenue would be up 21.1% from a year earlier, and operating profit up 6.8%.
For toxin, it projected first-quarter revenue of 56.9 billion won, up 41.2% from a year earlier. Exports are 40.9 billion won and domestic sales are 16 billion won. It analyzed that continued shipments to key countries such as China, the United States, and Brazil, and in Korea, strategic promotions of toxin units and lower unit prices per unit (volume discount) had an impact. It projected this year's revenue at 285.1 billion won, up 23.7% from a year earlier.
For fillers, it projected first-quarter revenue of 32.7 billion won: 28.1 billion won from exports and 4.6 billion won domestically. It viewed positively that the company is maintaining solid growth compared with some overseas peers whose revenue declines year over year. It expected this year's revenue to be 134.9 billion won, up 3.6% from a year earlier.
It also analyzed that cash holdings equivalent to 500 billion won as of the end of last year will help improve results this year.
Shin said, "Looking at the rerating of the domestic stock market over the past two years, idle cash has not been properly recognized for its value by the market," and added, "By spending money to improve results, the possibility of raising earnings forecasts will be higher going forward."