[Click eStock] "D.O, Risk Factors Resolved... Accelerating Earnings Improvement"

iM Securities analyzed on the 25th that Dio's performance improvement will accelerate due to the resolution of potential risk factors. No investment opinion or target price was provided.

Dio recorded consolidated sales of 31.3 billion KRW and operating profit of 400 million KRW in the third quarter of this year. Sales increased by 101.9% compared to the previous quarter, and operating profit turned positive. Lee Sang-heon, a researcher at iM Securities, said, "In the second quarter, domestic sales reflected returns processing and other impacts as a one-time adjustment for bad debts, etc.," adding, "In the third quarter, domestic sales rapidly grew to 5.8 billion KRW."

iM Securities expects Dio to record sales of 38.3 billion KRW and operating profit of 4 billion KRW in the fourth quarter of this year. Sales are expected to increase by 24.8% year-on-year, with operating profit turning positive. He said, "The performance turnaround will accelerate," and added, "As domestic sales normalize and are expected to reach 9 billion KRW, this will drive overall sales growth, which will also increase operating profit."

He explained, "In the second quarter of this year, 30.9 billion KRW of bad debt write-offs were reflected in selling and administrative expenses, preemptively accounting for potential bad debt factors that could arise from accounts receivable," and added, "The scale of accounts receivable significantly decreased from 129.4 billion KRW at the end of the first quarter to 76.3 billion KRW at the end of the third quarter." He further stated, "Above all, the removal of such potential bad debt factors could lead to sales growth translating into improved performance in the future."

Next year, Dio's expected consolidated sales and operating profit are projected at 168.5 billion KRW and 26.3 billion KRW, respectively. Sales are expected to increase by 40.7% year-on-year, with operating profit turning positive. He emphasized, "Domestic sales will see a large increase compared to the previous year due to a base effect from one-time factors," and added, "Overseas sales growth in China, India, and T?rkiye will also accelerate."