[Click eStock] "Neopharm, Zeroid Olive Young Launch Expected to Boost Performance Growth"

NH Investment & Securities stated on the 15th that "growth is expected from the launch of Zeroid at Olive Young" regarding Neopharm.

Zeroid, which has continued its growth through hospital channels, recently launched at Olive Young. Junki Baek, a researcher at NH Investment & Securities, said, "Despite the decline in the number of newborns, product competitiveness has supported Neopharm's growth over the past 10 years," and added that further performance expansion is expected accordingly. Exports to the U.S. and Japan are another factor of anticipation.

Neopharm was a high-value cosmetics stock traded at a PER of more than 20 times in 2016. Due to the decline in the number of newborns and the slowdown in export expansion, it has been derated to a PER level of about 8 times currently. The reasons for its previously high valuation were judged to be twofold: Neopharm's unique product competitiveness based on MLE technology and expectations for overseas expansion.

Considering an operating profit margin of 22%, it was judged that product competitiveness is still being maintained. Although overseas expansion was less than expected, there are still factors of expectation such as the launch of Zeroid at Olive Young. The current valuation is considered attractive.

In August this year, the Neopharm brand launched the Zeroid line at Olive Young, following Atopalm, Dermabee, and Real Barrier. Zeroid currently accounts for 30% of Neopharm's sales and has mainly been sold through hospital channels. Compared to Atopalm, which targets infants, Zeroid is for adults with a broader consumer base, so the launch at Olive Young is expected to contribute to overall sales growth.

They forecast solid results this year with sales of 120.2 billion KRW and operating profit of 26.7 billion KRW. With a 2024 PER of only 8 times and cash holdings amounting to half of the market capitalization, it was analyzed that the stock has very high undervaluation appeal within the industry. Researcher Baek said, "With the launch of Zeroid at Olive Young and the expansion of overseas exports, it can recreate the past glory as a high multiple stock."