[Click eStock] "Clasis, Earnings Meet Expectations... Target Price Maintained"

On the 14th, Korea Investment & Securities maintained its buy rating and target price of 67,000 KRW for Classys, stating that "a faster improvement in profitability is expected."

On the same day, Kang Si-on, a researcher at Korea Investment & Securities, said, "Although there were concerns about margin erosion due to the combined earnings with Iruda, which has a lower profitability compared to Classys, the synergy effects between the two companies will occur not only in sales but also in costs, leading to a faster recovery in profitability."

The preliminary results for the fourth quarter of last year showed sales of 74.4 billion KRW and operating profit of 35.8 billion KRW, representing increases of 58.3% and 63.3% year-on-year, respectively. Compared to the market consensus forecast that includes Iruda's results, both sales and operating profit met expectations. Iruda's sales of 11.7 billion KRW were reflected, accounting for 15.7% of total fourth-quarter sales.

Classys' standalone results recorded sales of 62.7 billion KRW and operating profit of 34.1 billion KRW, up 33.4% and 55.7% respectively compared to the same period last year. Researcher Kang said, "Consumables sales, which had declined in the third quarter of last year (due to reduced orders in the third quarter from the June fiscal year-end of the Thailand agency), grew by 21.7% quarter-on-quarter," adding that "the increase in the proportion of consumables, the strong dollar, and reduced advertising expenses were also behind the strong performance."

Researcher Kang added, "The improvement in production efficiency and cost rate increase through integrated purchasing at Iruda, as well as the decline in selling and administrative expenses ratio due to integrated operating expenses, are expected to strengthen quarter by quarter," and "Although the amortization of goodwill at Iruda will expand the scale of tangible and intangible depreciation to about 11 billion KRW annually, even considering this, the operating profit margin is expected to remain high at 49.0% and 50.9% this year and next year, respectively."

Classys presented a sales guidance of 350 billion KRW for this year (assuming an exchange rate of 1,400 KRW). This is 4.1% higher than the current market consensus forecast and, considering that the company has typically provided conservative guidance, it is interpreted as a positive signal for this year's performance. Researcher Kang added, "There are many factors to look forward to, such as the expansion of sales of non-invasive monopolar radiofrequency (RF) skin beauty devices, full-scale launches in the US and Europe, conversion of Voluma consumables to paid tips, and the release of new products by Iruda."