[Post-IPO] JLK's Flood of Orders in the Second Half... Will They Achieve Their Goals?

[Asia Economy Reporter Hyunseok Yoo] JLKE is failing to meet the performance forecasts it presented when it was listed on the KOSDAQ market at the end of last year. The company explained that the increased uncertainty due to factors such as the novel coronavirus infection (COVID-19) has had an impact. However, it plans to actively conduct business both domestically and overseas next year to improve its performance. Additionally, securing over 40 orders in the second half of the year is seen as a positive factor.

JLKE recorded consolidated sales of 300 million KRW and an operating loss of 5.5 billion KRW in the first half of the year. Although sales increased by 1761.84% compared to the same period last year, operating losses continued. As a result, the deficit, which was 25.3 billion KRW at the end of last year, increased to 30.3 billion KRW. A company official stated, "The medical artificial intelligence industry is a new market that did not exist before, and it is a market greatly affected by changes in the external environment," adding, "The sales strategy planned at the time of listing in December last year is currently delayed due to increased uncertainty in domestic and international sales environments caused by COVID-19 and other factors early this year."

Although the total sales for last year exceeded 200 million KRW, the sales scale did not increase significantly. In particular, there is a large gap compared to the performance forecasts presented at the time of listing. The lead manager, Korea Investment & Securities, predicted that JLKE would record sales of 1.3 billion KRW and an operating loss of 6.9 billion KRW in 2019, and this year, sales of 7.7 billion KRW with an operating loss of 7.9 billion KRW. The turnaround to profitability was expected next year. These estimates were calculated based on assumptions such as expanding domestic and international sales channels for currently sold products, domestic and international clinical approvals, changes in domestic and international insurance fee-related systems, and market share penetration possible by solution.

Although the performance is lower than expected at the time of the public offering, the stock price is trading in the 12,000 KRW range, surpassing the public offering price of 9,000 KRW. The reason for JLKE's rise is believed to be its entry into the telemedicine market based on artificial intelligence (AI) medical solutions and the benefits from the government's Digital New Deal promotion.

However, unlike the stock price, sales have shown a significant gap since last year. The gap rate between last year's sales and the forecast was 83%. The company explained that the delay in delivering the industrial security X-ray reading system, which was to be supplied to a domestic large corporation, was the cause.

The same applies this year. Based on first-half sales, a simple calculation projects a shortfall of 7 billion KRW compared to expected performance. However, the continued order streak from the second half is a consolation. JLKE has announced a total of 52 orders this year. Of these, 44 were announced only in the second half, with a total amount reaching 4.5 billion KRW. As a result, performance improvement in the second half compared to the first half is expected, but it is forecasted to fall short of expectations.

A company official explained, "We have newly entered the data business sector besides the medical AI solution sector and are expecting improved sales compared to last year through focused sales efforts," but added, "Regarding sales in the data business sector, the completion of services is concentrated at the end of this year, so sales are not recorded in the first-half results but will be accounted for at the end of the current term."

JLKE is a company that develops and sells medical platforms and security system products based on AI technology. It succeeded in commercializing 'JBS-01K,' Korea's first Grade 3 cerebral infarction analysis solution. Since then, it has grown into a company possessing various AI medical analysis solutions that interpret multiple parts of the body. Currently, it has established 'AIHuB,' a platform integrating various solutions into one. Along with this, it launched 'Hello Health,' a remote AI healthcare platform for telemedicine. Furthermore, by releasing 'Hello Data,' an AI total data management platform, it is expanding its business areas. It was listed on the KOSDAQ market through a technology special listing in December last year.

Based on new business areas, the company plans to strive to achieve its target performance next year. A company official emphasized, "The three platforms are organically connected and developed based on the common core technology of AI image processing, and we plan to actively enter domestic and international markets in the future," adding, "For AIHuB and Hello Data, we expect increased performance compared to this year depending on sales infrastructure and improvements in domestic and international sales environments, and we also anticipate sales related to 'Hello Health' in the telemedicine field."