[Click eStock] "Vatech, Continued Strong Performance and Profitability Improvement... Undervalued Appeal Highlighted"

[Asia Economy Reporter Ji-hwan Park] On the 10th, Eugene Investment & Securities evaluated Vatech as remaining undervalued despite achieving the highest performance in the third quarter of this year and continuing profitability improvement. They maintained a target price of 55,000 KRW and a buy rating.

Jong-sun Park, a researcher at Eugene Investment & Securities, stated, "The preliminary consolidated results for the third quarter recorded sales of 83.2 billion KRW and operating profit of 17.8 billion KRW," adding, "which represent increases of 30.6% and 84.9% respectively compared to the same period last year, marking the highest third-quarter performance ever." Sales slightly exceeded market expectations by 9.9%, but operating profit surpassed them significantly by 27.2%, resulting in an earnings surprise.

A positive aspect of the third-quarter results is that despite the ongoing impact of COVID-19, the company achieved the highest third-quarter sales ever. Profitability also improved significantly. Researcher Park said, "Looking at products, sales of 3D and 2D products increased by 46.7% and 124.3% respectively compared to the same period last year," adding, "Notably, 3D products surpassed 30 billion KRW for the first time within the third quarter." By region, growth was seen in all areas except domestic. Asia excluding Korea grew by 31.8%, Europe by 37.7%, and North America by 35.9% compared to the same period last year. Park noted, "Especially positive is that sales increased in North America and Europe, regions with good profitability, improving the operating profit margin from 15.1% in the third quarter last year to 21.4% this year, a 6.3 percentage point improvement."

There is a forecast that performance recovery will continue going forward. The expected fourth-quarter results are sales of 88.8 billion KRW and operating profit of 19.5 billion KRW, representing increases of 12.3% and 42.9% respectively compared to the same period last year, indicating continued performance recovery. Researcher Park emphasized, "The reason we expect continued performance recovery is that growth continues in North America, Europe, and China, all regions with high sales proportions," adding, "The growth of profitable new 3D products is maintained, and profitability improvement is expected to continue."

The current stock price is at a price-to-earnings ratio (PER) of 10.9 times based on this year's performance. Researcher Park evaluated, "It is trading at a significant discount compared to the domestic peers and similar companies (Ray, Osstem Implant, Rayence, InBody, Vieworks) average PER of 16.7 times," adding, "It has valuation appeal."