[Click eStock] "Classys, Earnings Estimates Met and New Product Effects Expected"… Target Price Up

[Asia Economy Reporter Lee Jung-yoon] Shinhan Financial Investment maintained a buy rating on Classys on the 18th, stating that the company's first-quarter earnings this year met consensus estimates and that the effects of new products are expected to appear. The target price was raised from 23,000 KRW to 27,000 KRW.

Classys' first-quarter sales this year are estimated at 31.2 billion KRW, a 46.3% increase compared to the previous year, and operating profit is estimated at 16 billion KRW, up 46.9%. Equipment sales are expected to reach 16.4 billion KRW, a 78% increase, due to the new product effect from the domestic launch of Shrink Universe. As of February this year, approximately 370 units of the new product have been sold, which is understood to be driven by replacement demand stemming from long-term experience with Shrink procedures. Additionally, consumables sales are projected to increase by 24% year-on-year to 12.6 billion KRW, due to the slowdown of the global Omicron variant spread and increased demand for cosmetic procedures.

Based on this, consolidated sales for the first half of this year are estimated at 63.9 billion KRW, a 25.7% increase year-on-year, and operating profit is estimated at 32.6 billion KRW, up 20.9%. Won Jae-hee, a researcher at Shinhan Financial Investment, explained, "Shrink Universe, which adopts a linear-type irradiation method and booster cartridges, has significantly shortened procedure time compared to previous models, so sales based on product competitiveness are expected to continue strong in the first half." He added, "With the decreasing trend of COVID-19 confirmed cases, global equipment sales are expected to recover to pre-pandemic levels."

He continued, "Consumables sales in major countries including Brazil are expected to continue growing in the future," but noted, "However, operating profit margin is expected to decrease by 1.8 percentage points compared to the same period last year, due to increased advertising and promotional expenses related to new product brochures and exhibitions."

Researcher Won also stated, "Although there is short-term valuation pressure due to recent stock price reflection of reopening expectations, the investment attractiveness remains as the expectation of accelerated market penetration in North America and China through Bain Capital's global network is valid." He added, "With the launch of Shrink Universe in Brazil and the release of the RF product Volnumer, product mix improvement and the full-scale effect of new products are expected, so the medium- to long-term growth drivers are sufficient."