[Click eStock] "SC Engineering Secures Growth Potential through Cellontec Acquisition"

KTB Investment & Securities Report

[Asia Economy Reporter Minji Lee] On the 7th, KTB Investment & Securities expressed the opinion that S&C Engineering secured growth potential through the acquisition of the bio-collagen business of Cellontech, a subsidiary to be incorporated.

S&C Engineering is a small to medium-sized EPC specialized company with 50 years of experience, capable of securing various plant EPC orders in the chemical and energy sectors. Although it recorded sluggish order performance during 2019-2020 when COVID-19 spread, from this year, investment in facilities in the petrochemical and specialty gas sectors has revived, achieving approximately 100 billion KRW in orders in the first half of the year. Considering the front-end industry order cycle, annual new orders are expected to show a significant turnaround from 65.4 billion KRW last year to around 200 billion KRW this year.

The company plans to acquire a 51% stake in Cellontech, a regenerative medicine specialist, from Sewon ENC for 17.1 billion KRW, with the scheduled date being September 30. Cellontech is a company engaged in regenerative treatment medical devices and cell therapy based on bio-collagen. The company's core technology is bio-collagen manufacturing technology, based on which a total of nine products have been commercialized, and in June this year, it launched Cartizol, the first collagen intra-articular injection in Korea.

Cartizol has various advantages compared to existing intra-articular injections such as HA and PN. Collagen is one of the components within the joint, and the surface layer of human cartilage tissue is composed of collagen. Bio-collagen Cartizol, similar to human collagen, supplements and coats damaged joint cartilage tissue, alleviating pain and shock while supporting the natural healing process. Researcher Jaeyoon Kim of KTB Investment & Securities said, “Since its launch in June, supply has started to six general hospitals, and supply procedures are underway at four tertiary general hospitals in the Seoul and Gyeonggi regions. Considering the current supply trend, sales from Cartizol alone are expected to reach about 5.5 billion KRW this year.”

Additionally, to respond to the approximately 200 billion KRW joint injection market, the company is expanding a new bio-collagen production plant in Namyangju, which is expected to enable production of 150kg of bio-collagen from 2023, compared to the existing 22kg. Researcher Jaeyoon Kim explained, “Due to the characteristics of bio-collagen similar to human collagen, expansion is expected not only for knee joint injections but also for other joint indications and the cosmetic surgery sector.”