[Click eStock] "Classys, Value Burden Eased... Target Price Up 3.4%"

Iruda's Merger New Shares Listed and Sale Rumors Cause 15.7% Stock Price Drop
PER Falls to 27x, Potential New Investment Opportunity
US Market Entry Becomes Visible, Successful Equipment Launch Expected

Kiwoom Securities analyzed on the 28th that some valuation pressure on Classys has been alleviated, suggesting it could be utilized as a new investment opportunity. They maintained a 'Buy' rating and raised the target price by 3.4% from the previous 58,000 KRW to 60,000 KRW. Classys' closing price on the previous trading day was 53,000 KRW.

Shin Minsu, a researcher at Kiwoom Securities, stated, "Due to the listing of new shares from the merger with Iruda and rumors of a sale, the stock price fell by 15.7%, and the price-to-earnings ratio (PER) dropped to 27 times. This has partially relieved valuation pressure." He added, "Since the COVID-19 pandemic, when the 12-month forward PER exceeds 30 times, stock price corrections tend to occur, but this decline could be used as a new investment opportunity." The target price of 60,000 KRW is based on the expected 2025 earnings per share (EPS) of 1,997 KRW multiplied by a target PER of 30 times.

According to Kiwoom Securities, Classys is estimated to record sales of 60.3 billion KRW in the third quarter of 2024, an increase of 25.0% year-on-year and 2.7% quarter-on-quarter. Operating profit is expected to be 31.1 billion KRW, up 25.9% year-on-year but down 0.4% quarter-on-quarter. The operating profit margin is anticipated to reach 51.5%. Exports of skin beauty devices under HS code 9018.90, shipped from Gangnam-gu, Seoul, showed a healthy export trend with approximately 31.395 million USD during the third quarter, up 25.3% year-on-year and 0.9% quarter-on-quarter.

Consumables sales are expected to reach 27.9 billion KRW, increasing 36.2% year-on-year and 7.1% quarter-on-quarter, accounting for 46.3% of total sales. This growth is attributed to steady consumable usage in domestic and overseas hospitals and clinics. In particular, paid consumable purchases are ongoing in several countries where the 'Volnumer' has been launched, and a formal equipment launch event is scheduled with Cartessa Aesthetics in the United States at the end of October.

Researcher Shin said, "The merger date with Iruda is October 1, so it will not affect third-quarter results but will be reflected in consolidated financial statements from the fourth quarter." He added, "Currently, the merger issue is not included in the estimation model, and temporary financial statement fluctuations are expected due to poor business performance and settlement payments for lawsuits." He also noted, "The company expects that with the U.S. market entry becoming visible, successful equipment launches and consumables sales will continue."