Daishin Securities said on the 26th that PharmaResearch could emerge as a leading KOSDAQ growth stock as expectations rise for measures to revitalize KOSDAQ investing. It maintained a Buy rating and a target price of 6.2 million won. PharmaResearch closed at 305,000 won the previous day.
PharmaResearch posted first-quarter revenue of 146.1 billion won and operating profit of 57.3 billion won, in line with its business plan. It also kept its goal to increase full-year revenue by 25% from a year earlier and to lift its operating margin (OPM) to the high-30% range.
On the weak first-quarter results for exported medical devices, PharmaResearch pointed to China and Japan. Both countries have yet to obtain approval for medical devices that can be used for injections, and demand in China has been dampened by changes in local regulations and distribution conditions. In Japan, it said reorders were delayed due to a postponed new product launch.
Daishin Securities said it identified growth points for the period after the second quarter at a recently held PharmaResearch non-deal roadshow (NDR). The company plans to defend domestic sales with its core product Rejuran and to restore medical device sales through exports focused on Europe and the Middle East. Cosmetics upside is a key area of interest.
For the second quarter, PharmaResearch presented a goal to increase domestic medical device sales by 10% from the previous quarter and export medical device sales by 25%, lifting companywide revenue by the high single digits.
Specifically, it said the domestic medical device segment held up despite a slowdown in dermatology spending by foreign visitors, noting that foreign dermatology spending in the first quarter fell about 30% from the fourth quarter of last year, but increased domestic demand and an expanded network of partner hospitals offset the decline.
It therefore expected domestic medical device sales to rise in the second quarter as foreign demand recovers.
For export medical devices, it expected a recovery centered on Europe and the Middle East starting in the second quarter. In Europe, it said sales to French aesthetic company Vivacy reached more than 2 billion won on the initial January order and more than 3 billion won on the April reorder, adding that initial inventory depletion was rapid, raising the possibility of additional reorders in the second quarter.
In particular, upside factors emerged in the cosmetics segment. Han Song-hyeop, an analyst at Daishin Securities, said, "Within the export division, the proportion of cosmetics sales exceeds medical devices," and noted, "Expansion into U.S. offline channels as well as Canada and the United Kingdom is expected, and while the second-quarter target is conservative, there is ample room for outperformance based on channel expansion."
Han added, "In an environment of rising expectations for KOSDAQ investment revitalization and inflows of institutional funds, PharmaResearch could emerge as a leading KOSDAQ growth stock with profitability, financial stability and overseas growth potential."