[Click eStock] JCS Medical Long-Term Growth Expected... New Target Price Set at 11,500 Won

[Asia Economy Reporter Myunghwan Lee] Hana Financial Investment announced on the 28th that it newly initiated a buy rating and a target price of 11,500 KRW for J-Systems Medical, expecting long-term growth driven by increased sales.

J-Systems Medical manufactures and sells aesthetic medical devices utilizing High-Intensity Focused Ultrasound (HIFU) and Radio Frequency (RF) technologies.

Hana Financial Investment forecasts continued overseas sales growth due to the expanded sales of 'Potenza,' a skin medical device by Cynosure, J-Systems Medical's Original Design Manufacturer (ODM) partner. In 2019, J-Systems Medical entered the U.S. market by signing an ODM supply contract for the RF device Potenza with global aesthetic device company Cynosure. The cumulative units sold were 187 in 2019, 461 in 2020, and 1,035 last year.

Hana Financial Investment projects this company's sales for this year to increase by 29.7% year-on-year to 105.5 billion KRW, and operating profit to rise by 41.1% to 33.3 billion KRW. With the expected launch of a new HIFU product in the second half, sales are anticipated to show a low-high seasonal pattern. RF sales are expected to increase by 50.3% year-on-year to 25.1 billion KRW due to an increase in the Minimum Order Quantity (MOQ) with Cynosure. Domestically, the next-generation RF device is expected to receive regulatory approval within the year, with full-scale sales anticipated next year.

Hana Financial Investment also expects consumables sales to increase. Both HIFU and RF devices recorded explosive sales last year, creating a virtuous cycle in consumables sales. Consumables sales for 2022 are projected to increase by 34.5% year-on-year to 50.2 billion KRW. Due to the operating leverage effect from increased consumables sales, the operating profit margin for this year is also expected to rise by 2.6 percentage points year-on-year to 31.6%.

Researcher Dohyun Kim of Hana Financial Investment stated, "We consider 2022 as the period when full-scale Potenza device sales begin," and added, "Total Potenza sales this year are expected to exceed 800 units, continuing long-term growth."