[Click eStock] "Dentium, 3Q Earnings Expected to Meet Estimates... Focus on China VBP Bid Price"

[Asia Economy Reporter Lee Jung-yoon] NH Investment & Securities maintained its buy rating and target price of 120,000 KRW for Dentium on the 29th, stating that the company's Q3 sales and operating profit are expected to meet consensus estimates, and that performance and valuation will be determined based on the results of China's volume-based procurement (VBP) bidding. The VBP policy refers to the Chinese government's bulk purchasing of pharmaceuticals at low prices to improve patient accessibility.

Dentium's Q3 sales this year are projected to increase by 29% year-on-year to 91.8 billion KRW, with operating profit expected to rise 102.6% to 30.6 billion KRW. Additionally, annual sales are forecasted to grow 30.3% to 379.9 billion KRW, operating profit to increase 86.8% to 130.6 billion KRW, and the annual operating profit margin is estimated at 34.4%.

Park Byung-guk, a researcher at NH Investment & Securities, explained, "The VBP bulk purchasing policy by China's National Healthcare Security Administration, which the market is focusing on, is currently in the preparation stage (August to December) with bidding announcements underway. After standardizing prices across regions in China by the end of November, implant consumables price guidelines are expected to be released, so bidding prices are likely to be disclosed in October or November."

He added, "Since 40% of Dentium's sales in China are through dealers, it is difficult to know the discount level compared to current prices before the bidding prices are disclosed, so dealers do not need to aggressively stockpile inventory. Therefore, we have conservatively estimated the second half performance."

Based on cases from pilot VBP regions, the price for one set of implant fixtures and abutments is expected to be around 1,000 yuan, which is estimated to be similar to the current selling price. Researcher Park added, "However, it is still too early to be certain about the standardized bidding prices for all regions, and Dentium's performance and valuation will be determined according to the bidding results."