Seegene, the Bio Stock in Crisis, Becoming the 'Trusted Man'?

Up 9.78% Yesterday, Third Consecutive Day of Gains
Reentered Top 10 in Market Cap Rankings
Diagnostic Kit Stocks Offset Bio Sector Weakness

[Asia Economy Reporter Song Hwajeong] Recently, with the delisting decision of Sillajen, embezzlement at Osstem Implant, and accounting fraud controversy at Celltrion, the biotech sector continues to struggle. In this situation, as Seegene shows strength, attention is focused on whether the cautious investor sentiment toward biotech stocks will ease.

As of 9:25 a.m. on the 21st, Seegene was trading at 61,000 won, up 600 won (1.01%) from the previous day. After starting weak, it turned upward and continued its strong performance for the third consecutive day. The previous day, it rose 9.78%, re-entering the top 10 in market capitalization rankings. On this day, it climbed as high as 9th place in the early session.

Recently, biotech stocks have been sluggish due to a series of negative events. The KOSDAQ150 Healthcare Index, composed of representative KOSDAQ biotech stocks, has fallen more than 11% since the beginning of the year. This significantly exceeds the KOSDAQ's overall decline of -7.28% during the same period. Investor sentiment has sharply contracted due to consecutive negative news since the start of the year. In this context, the recent strength in diagnostic kit stocks, including Seegene, is compensating for the biotech sector's weakness. Kim Hyungsoo, a researcher at Hanwha Investment & Securities, analyzed, "Despite the overall sector weakness, the increase in domestic testing volume in the fourth quarter of last year and the global spread of Omicron infections led to continuous announcements of overseas export contracts by companies like Seegene and SD Biosensor, expanding the price gains of diagnostic kit companies."

Seegene's fourth-quarter performance last year is also expected to exceed expectations. Mirae Asset Securities estimated Seegene's fourth-quarter sales and operating profit at 439.2 billion won and 215.4 billion won, respectively. Although these figures represent decreases of 1% and 16% compared to the same period last year, they significantly surpass market expectations. Kim Choonghyun, a researcher at Mirae Asset Securities, explained, "The current stock price is at a considerable undervaluation level with a 12-month forward price-to-earnings ratio (PER) of 7 times. The undervaluation is due to concerns about performance slowdown from high dependence on COVID-19 sales and the absence of a cash reinvestment strategy. However, considering the increased demand for PCR tests due to COVID-19 variants and Seegene's business situation, the possibility of a sharp performance decline is low." Mirae Asset Securities has significantly raised its performance estimates for Seegene this year, revising sales from 795 billion won and operating profit from 278 billion won to 1.216 trillion won and 532 billion won, respectively.