[Click eStock] "Lutronic, High Growth in Next Year's Performance... Reopening Beneficiary Undervalued"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 19th that it has raised the target price for Lutronic from 27,500 KRW to 31,500 KRW, forecasting that sales growth of premium products in developed countries will continue in the third quarter, leading to next year's performance exceeding expectations.

Choi Jae-ho, a researcher at Hana Financial Investment, said, "Based on the cumulative performance for the third quarter, the 2021 expected sales are highly likely to exceed the existing performance guidance, and the current stock price is considered undervalued at about 14 times the 12-month forward price-to-earnings ratio (PER)." He added, "Especially considering the seasonal peak in the fourth quarter and the benefits of reopening, there is sufficient potential for an increase."

Lutronic's third-quarter sales are expected to be 39 billion KRW, a 23.3% increase compared to the same period last year, and operating profit is forecasted to rise 62.0% to 6.7 billion KRW. Growth of high-margin products (Clarity 2, Genius, Hollywood Spectra, etc.) is expected, mainly in developed markets. The U.S. subsidiary achieved a turnaround to profitability in the second quarter due to deferred demand and strengthened sales networks, and third-quarter sales are projected to grow significantly by 40.2% to 12.9 billion KRW. It is explained that in the U.S., the sales proportion of high-priced product groups is estimated to be over 80%, and a direct sales method allows maintaining high selling prices.

Sales in Europe and other regions (Middle East, etc.) are expected to increase by 40.8% year-on-year to 11.5 billion KRW due to expanded sales by the German subsidiary and distribution agents.

This year's sales are expected to increase by 44.6% year-on-year to 167.1 billion KRW, and operating profit is forecasted to rise 474.2% to 35.6 billion KRW. High-margin laser and RF product sales will continue, and external growth is expected due to the new launches of DermaV (vascular treatment) and Accufit (body shaping) products this year and next year.