[Click eStock] 'Earnings Shock' Seegene,... Focus on Growth in Q2 This Year

Daishin Securities Report
Target Price Revised Downward by 12%

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a market performance rating on Seegene on the 20th and set a target price of 29,000 KRW. The target price was lowered by 12% from the previous level.

In the fourth quarter, Seegene recorded sales of 122.6 billion KRW, down 70% year-on-year. Operating profit was 15.5 billion KRW, a 92% decrease, falling short of market expectations (33 billion KRW). The reason was that 11.7 billion KRW related to the Italian government payback was deducted from this quarter's sales. Excluding this issue, operating profit was 22.7 billion KRW.

Sales of COVID-19 reagents were 47.3 billion KRW, down 84% year-on-year. However, non-COVID-19 reagent sales increased by 40% to 55.2 billion KRW, extraction reagent sales were 8.7 billion KRW, and equipment and other sales amounted to 26.1 billion KRW. Songhyeop Han, a researcher at Daishin Securities, said, “It is encouraging that non-COVID sales are increasing mainly overseas, and for the first time, quarterly non-COVID sales exceeded COVID sales,” adding, “The proportion of non-COVID sales this year is around 41%.”

This year, sales are expected to be 523.9 billion KRW and operating profit 127.7 billion KRW, down 39% and 35% respectively compared to the previous year. Since the second quarter of last year, sales have shown a downward stabilization trend, and performance growth is expected to be confirmed from the second quarter of this year. However, cost increases due to workforce expansion and marketing activities should be taken into consideration.

Researcher Songhyeop Han stated, “Reagent sales, which were between 15 to 20 billion KRW before COVID-19, have now risen to around 50 billion KRW,” and added, “If the equipment installed during the pandemic leads to full-scale sales in the U.S. this year and the 500 billion KRW cash is well utilized in the right places, performance growth and valuation rerating will be possible.”