Diagnostic Kit Stocks Running Again

Warning Signs of the 4th Wave of COVID-19
Cases Surge Over 40% This Month

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] As warnings of the 4th wave of COVID-19 surge again, the diagnostic kit sector is receiving renewed attention. Since the second half of last year until recently, diagnostic kit stocks had been on a steady decline due to the introduction and widespread administration of vaccines, but this month they have surged by more than 40% on average.

As of 9:02 AM on the 13th, Seegene was trading at 180,500 KRW, up 2.27% from the previous trading day. This is the first time in over two months since February 18 that Seegene's stock price has surpassed 180,000 KRW. The stock has risen 35.7% over the past 10 days leading up to the previous day. During the same period, other diagnostic kit companies such as LabGenomics (35.2%), Access Bio (42.5%), Sugentech (44.0%), JinMatrix (73.2%), and Humasis (69.4%) also saw significant stock price increases.

The recent strength in diagnostic kit stocks is due to concerns over the 4th wave of COVID-19. Expectations that demand for diagnostic kits will continue amid the recent resurgence of COVID-19 are being reflected in stock prices. The government announced 542 new confirmed COVID-19 cases on this day, and the daily average number of cases, which was in the 400s last month, has recently exceeded 600.

Additionally, Seoul Mayor Oh Se-hoon has urged the government to approve 'self-diagnostic kits' as part of Seoul's co-prosperity quarantine measures to prevent the spread of COVID-19, and the government has also stated it will actively support the introduction and development of kits, further increasing investor interest.

The arrival of earnings season and high expectations for diagnostic kit companies' performance are also reasons driving stock prices higher. Seegene announced its preliminary consolidated sales for the first quarter at 352.1 billion KRW, approximately 4.3 times higher than 81.8 billion KRW in the same period last year. According to FnGuide, Seegene's annual sales for this year are expected to reach 1.3275 trillion KRW, exceeding last year's sales of 1.1252 trillion KRW, which was a peak during the height of COVID-19, by 18%.

Small shareholders' collective actions demanding shareholder return policies from management have also positively influenced stock prices. Seegene's small shareholders have demanded the resignation of CEO Cheon Jong-yoon, the recruitment of professional managers, and share buybacks, citing management's failure to manage the stock price. In response, Seegene decided at the March general meeting of shareholders to introduce quarterly dividends and a 30 billion KRW share buyback program, and last week announced a plan for a bonus issue allocating one new share per one common share. Access Bio shareholders have also been conducting a truck protest since the day before, urging management for bonus issues and shareholder dividends.