[Click eStock] "Seegene, Performance Growth Expected to Continue This Year"

[Asia Economy Reporter Ji-hwan Park] Hana Financial Investment evaluated that Seegene's performance will continue to rise even after the development of a COVID-19 vaccine, stating that during the COVID-19 pandemic, diagnosis and vaccination must be addressed together.

Minjung Sun, a researcher at Hana Financial Investment, said, "Seegene is expected to achieve record-breaking performance in the fourth quarter of last year, surpassing the previous quarter." She estimated, "The fourth-quarter sales on a consolidated basis are expected to increase by approximately 1392% year-on-year to 504 billion KRW, and operating profit is estimated to increase by about 6647% year-on-year to 343 billion KRW."

According to customs clearance data, the export amount from Songpa-gu, where Seegene is located, reached 358.84 million USD (approximately 400.9 billion KRW) in the fourth quarter. This is a 69.5% increase compared to the third quarter, which had achieved the largest export scale ever. Researcher Sun's analysis suggests that equipment sales, including genetic amplification devices and extraction devices, are expected to exceed 50 billion KRW due to increased sales. He explained, "Due to the seasonal characteristics of respiratory virus outbreaks, the COVID-19 virus is still rampant in the Northern Hemisphere, including the United States and Europe. Even in the Southern Hemisphere, such as Brazil and Mexico, confirmed cases have begun to surge, sustaining demand for diagnostic kits in Seegene's major export regions of Europe and South America."

Despite these strong results, the stock price has been declining. Since November last year, as interim results of the Phase 3 clinical trials for the COVID-19 vaccine under development were announced, Seegene's stock price has continued to fall. Even after the announcement of record-breaking third-quarter results and consecutive new highs in diagnostic kit export data from the customs office, Seegene's stock price has struggled to rebound.

This is because the market perceives diagnosis as the opposite of vaccination. In other words, once a vaccine is developed, the COVID-19 pandemic will end, and diagnostic kits will no longer be necessary. Therefore, the market believes that Seegene will find it difficult to achieve the same performance as in 2020 this year.

Researcher Sun estimated, "Seegene's sales this year are expected to increase by 24.3% year-on-year to 1.48 trillion KRW, and operating profit is expected to increase by 21.3% to 924 billion KRW," adding that "as of 2021, the price-to-earnings ratio (PER) is at a very undervalued level of 6.4 times."

Researcher Sun stated, "To end the COVID-19 pandemic, large-scale vaccination and diagnosis must be carried out simultaneously," citing recent research from the U.S. Centers for Disease Control and Prevention (CDC) COVID-19 Response Team, which estimates that the proportion of asymptomatic infections is about 30%, and 59% of all COVID-19 infections are believed to have been transmitted by asymptomatic carriers."

Looking at the case of Dongbu Detention Center in Korea, he emphasized that when confirmed cases occur in confined and crowded spaces, an initial full-scale investigation must be conducted. This investigation is not a one-time event; in the case of Dongbu Detention Center, up to the 10th full-scale investigation has been conducted to ensure that no additional confirmed cases occur.

Researcher Sun emphasized, "Due to the particularly high proportion of asymptomatic infections and the high transmissibility of the COVID-19 virus, expanding diagnosis must accompany vaccination even after vaccine development to end the COVID-19 pandemic."