[Click eStock] "Seegene, 2020 Earnings Growth Expected... Target Price Up 26%"

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating on Seegene on the 27th, expecting performance growth this year, and raised the target price by 26% from the previous level to 43,000 KRW.

The company's sales in the fourth quarter were 33.8 billion KRW, an increase of 11.6% compared to the same period last year. Operating profit recorded 5.1 billion KRW, up 2.8% during the same period.

Minjeong Seon, a researcher at Hana Financial Investment, explained, “Seegene's operating profit margin in the fourth quarter fell by 4.4 percentage points compared to the average of the previous three quarters to 15.2% due to one-time factors,” adding, “The cost of sales increased by 24% year-on-year due to disposal of expired products, and selling and administrative expenses rose due to performance bonuses.”

On the 18th, Seegene's stock price surged about 16% in one day following news of successful development of a diagnostic reagent for COVID-19. The company obtained European certification (CE-IVD) on the 7th and received emergency use approval from the Korea Disease Control and Prevention Agency on the 12th.

Researcher Seon said, “The company is producing 10,000 to 20,000 COVID-19 diagnostic reagents per day,” and “Since last week, it has been shipping COVID-19 diagnostic reagents to Europe.”

Seegene's sales of respiratory diagnostic reagents increase significantly in the first quarter due to seasonal factors. Additional growth is expected if quarterly sales exceed 10 billion KRW from COVID-19 diagnostic reagents.

Researcher Seon forecasted, “Due to the outbreak of the COVID-19 virus and the rapid growth of respiratory diagnostic reagents, sales in 2020 are expected to grow about 30% year-on-year to 157 billion KRW,” and “When sales of diagnostic reagents increase beyond a certain scale, operating profit will leverage and increase by nearly 38.3 billion KRW.”