[Post-IPO] Microdigital Continues Poor Performance... "Overcoming Through Business Strengthening Including New Products"

[Asia Economy Reporter Yoo Hyun-seok] Microdigital's poor performance continues. This is due to a decrease in sales related to one of its main products, the medical automation system. Although the contract to supply COVID-19 diagnostic kits has been signed, increasing the likelihood of higher sales next year, growth in the core business division is necessary for sustained growth. The company plans to overcome the poor performance next year through new products and strengthening existing sales.

According to the Financial Supervisory Service on the 18th, Microdigital recorded sales of 300 million KRW and an operating loss of 1.5 billion KRW in the third quarter. Sales decreased by 50% compared to the same period last year. The company remained in the red. On a cumulative basis for the third quarter, sales were 1.8 billion KRW, down 45.2% from the same period last year. Operating losses reached 4.5 billion KRW.

Microdigital has three product lines: bioanalysis systems, medical automation systems, and consumables. Sales of medical automation system products declined, leading to overall poor performance. The number of medical automation system units sold was 14, down 6 units from the same period last year. Bioanalysis systems sold a total of 100 units domestically and overseas, an increase of 5 units compared to 95 units last year.

This is a significant deviation from the projections made at the time of listing. Microdigital presented in its investment prospectus that it would record sales of 11.6 billion KRW and an operating loss of 1.1 billion KRW this year. Based on current performance, sales are nearly 10 billion KRW short. A company official attributed the poor performance to "the impact of COVID-19" and said, "Since overseas sales are significant, orders from overseas clients have also been delayed."

The poor performance has also worsened Microdigital's financial condition. The company has been running deficits from 2018 through the third quarter of this year. The debt ratio, which was 30.3% at the end of last year, rose to 52.3% in the first half of this year and further increased to 73.52% in the third quarter.

However, sales are expected to increase next year. Last month, the company signed a supply contract for the large-volume COVID-19 antibody diagnostic kit 'MDGen.' The total contract amount is 17 billion KRW, which corresponds to 433.14% of last year's sales. The supply period is until December 31 of next year. A company representative said about the diagnostic kit, "We have produced a certain amount according to customer orders, and it will be reflected in the performance later."

The company plans to recover performance next year through strengthening sales of existing products and generating sales from new products. The product expected next year is the disposable cell culture system. A company official said, "Next year, we plan to focus on equipment and business. Since market share is gradually increasing both domestically and overseas, remarkable growth is expected in this area after next year."

He added, "We are the only company in Korea with a disposable cell culture system," emphasizing, "Recently, there has been a growing trend to use domestic products if performance is equivalent, so this product will help increase sales next year."

Microdigital is a total medical system solution company that designs, manufactures, and sells bioanalysis systems, immunoassay automation systems, and high-sensitivity precision point-of-care testing (POCT) businesses based on analysis and diagnostic technology. It holds Korea's only original technologies for absorbance, fluorescence, and luminescence, as well as automation technologies for fluid control and temperature control. Based on this, it has secured chemiluminescence POCT technology based on analysis principles such as large-scale automation systems.