[Click eStock] Ray, Effective Bottom Buying... Clear Earnings Momentum

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 14th that it maintains its buy rating and target price of 45,000 KRW for Ray.

Amid increased market volatility and short-term uncertainty until the announcement of the China business in November, the current stock price has been adjusted to a 2022 price-to-earnings ratio (PER) of 15 times, representing a historically low valuation level. Daishin Securities analyst Han Kyung-rae emphasized, "Considering the quarterly top-line growth, the full-scale turnaround in the second half, and the momentum expected to materialize in 2022, a trend-based recovery of corporate value is necessary."

The third-quarter earnings are expected to show sales of 25.7 billion KRW (+81.3% YoY) and operating profit of 5.8 billion KRW (+267.7%). Sales by major regions are projected as follows: domestic 2.4 billion KRW (+339%), US 5.7 billion KRW (+112%), Europe 2.3 billion KRW (+262%), and China 7.7 billion KRW (+34%). The seasonal effect in the second half, along with a base effect centered on the US and Europe, is expected to drive record-high quarterly results from the second quarter onward. The third-quarter operating margin is forecasted to improve to 22.4%, up 11.4 percentage points YoY and 1.5 percentage points QoQ.

In the fourth quarter, as the peak season for medical devices, quarterly sales are expected to surpass 30 billion KRW. The annual sales for 2021 are anticipated to increase by 72% year-on-year to 94.8 billion KRW, with operating profit expected to rise by 303% year-on-year to 18.4 billion KRW.

Analyst Han stated, "The China JV entry is expected to materialize by the end of 2021, and in 2022, additional performance growth is possible through business diversification (3D oral scanners, transparent aligners). The current stock price is at an absolute undervaluation level with a 2022 PER of 15 times, making it an effective opportunity for bottom-fishing."