[Click eStock] Vatech, High Operating Profit Growth... Target Price 4,500 Won 'Coverage Initiated'

[Asia Economy Reporter Lee Seon-ae] Ebest Investment & Securities announced on the 10th that it is initiating coverage on Vatech with a buy rating and a target price of 45,000 KRW. The target price was calculated using RIM valuation. Jeong Hong-sik, a researcher at Ebest Investment & Securities, stated, "A target price-to-earnings ratio (PER) of 10.1 times (based on 12-month forward earnings per share, EPS) is considered reasonable given the EPS growth rate of 13.4% from 2021 to 2024."

The second-quarter results showed sales increased by 25.5% to 106.7 billion KRW, and operating profit rose by 15.3% to 23 billion KRW. These figures significantly exceeded the company's previous estimates (sales of 91.9 billion KRW and operating profit of 20.5 billion KRW) by 16.1% and 12.3%, respectively. The sales growth was driven by strong sales of the Green series in 3D products, which grew by 47.1 billion KRW (+43.7%), and new sales generated from the launch of the entry-level CT ‘Vatect A9’ targeting emerging markets.

Additionally, it appears that the pass-through of raw material cost increases to product prices (ASP increase) proceeded smoothly. By region, high growth was observed in the US (28.8 billion KRW, +34.5%), Europe (32 billion KRW, +31.8%), and India (6.1 billion KRW, +165.7%). However, sales in China decreased to 7.5 billion KRW (-33.2%). This decline is attributed to the company's Chinese subsidiary being located in Shanghai, which has been affected by lockdowns.