Korea Investment & Securities Co. said on the 16th that PharmaResearch(214450)'s medical device and cosmetics businesses are both continuing to grow. It maintained its "buy (BUY)" rating and raised its target price 11.9% to 470,000 won from 420,000 won. The upside from the previous trading day (327,500 won) is 43.5%.
Kang Eun-ji of Korea Investment & Securities Co. said, "Both the domestic medical device and cosmetics businesses show clear earnings growth," and noted, "We also expect medium- to long-term improvement in cosmetics business profitability through the acquisition of CG USA and rising cosmetics sales to North America."
Kang projected PharmaResearch's second-quarter consolidation sales at 165.5 billion won, up 17.7% from a year earlier, and operating profit at 67.4 billion won, up 20.6%, in line with market consensus.
The medical device business is driving results. Domestic medical device sales are expected to grow from the previous quarter on the back of recovering Chinese tourist traffic and stable demand in existing countries. Export medical device sales are also expected to continue increasing, supported by strong sales to Europe and solid demand in existing markets.
The cosmetics business is also showing clear growth. Domestic cosmetics sales are set to rise sharply on strong sales of the Rejuran brand and increased orders from major clients, while export cosmetics are projected to maintain solid growth on the expansion of sales at U.S. offline stores and the effects of entering Southeast Asian online channels.
Kang said, "Although some one-off sales to Eastern Europe were included, even excluding them we see confirmed growth through sales at U.S. offline stores and entry into Southeast Asian online channels."
As reasons for the target price hike, Kang cited improving results and growth potential. Kang said, "The current share price is trading at around 14 times 12-month forward price-to-earnings ratio (PER), so valuation pressure is not significant," and added, "Considering increased demand for dermatology procedures from the recovery of Chinese tourists and solid domestic demand, this is a valid time for a buy-the-dip strategy."