[Click eStock] "KPS, Nearly 50% Upside Potential"

"Pharmaceuticals and Bio, Mid- to Long-Term Growth Drivers"

On the 20th, SK Securities analyzed that the current stock price of KPS is undervalued and has nearly 50% upside potential.

Seonjae Heo, a researcher at SK Securities, stated, "The current stock price is somewhat undervalued at a price-to-earnings ratio (PER) of about 9 times based on this year's expected earnings," and gave a 'Buy' rating with a target price of 13,000 KRW. KPS's consolidated performance for this year is expected to be sales of 228.5 billion KRW (a 79.1% increase from the previous year) and operating profit of 19 billion KRW (a 205.1% increase).

KPS started as an OLED display equipment manufacturer, but since being acquired by CEOs Seongcheol Kim and Hayong Kim in 2020, it has been shifting its focus to the pharmaceutical and bio business. Researcher Heo evaluated, "The business transformation pursued over the past five years was completed as of the first quarter of this year," adding, "Through profitable businesses such as battery recycling and ETC manufacturing, it is securing stable cash flow and is expected to focus on its core bio business for mid- to long-term growth."

KPS is securing stable cash flow through Battery Solutions, acquired in 2023, and Korea Global Pharma, acquired in 2024. Battery Solutions focuses on recycling automotive batteries (lead-acid batteries, NCM, LFP) and recorded sales of 110 billion KRW and operating profit of 11 billion KRW last year. This year, it is expected to grow to sales of 165 billion KRW and operating profit of 16 billion KRW due to additional expansion effects.

Korea Global Pharma manufactures specialized medicines such as cardiovascular and digestive system hyperlipidemia treatments, recording sales of 37 billion KRW and operating profit of 1 billion KRW last year. This year, it plans to expand its product lineup to over-the-counter (OTC) drugs and extend its sales area to the metropolitan area. Through this, sales of 42 billion KRW and operating profit of 3.2 billion KRW are expected.

The OLED display equipment business will also be maintained. This year, it is expected to generate sales of 15 billion KRW by supplying FMM (Fine Metal Mask) inspection equipment to Chinese companies Junglim, Visionox, and Seedtech. However, the sales proportion of the display business is likely to gradually decrease in the future.

KPS is securing mid- to long-term growth drivers in the pharmaceutical and bio sectors. Its subsidiary KB Biomed is a developer of an oral obesity drug platform and possesses technology that mineralizes peptides to directly deliver them to small intestine cells. Last year, in preclinical trials on rodents, the oral insulin under development showed a bioavailability of 35%, demonstrating promising results.

Another subsidiary, Algok Bio, is developing the ovarian cancer targeted therapy 'Idetrexed' and the lung cancer antibody anticancer drug 'AGK-102.' Among these, Idetrexed recently began a Phase 1b clinical trial combining AstraZeneca's PARP inhibitor 'Lynparza,' led by the UK Institute of Cancer Research (ICR). The first patient dosing is scheduled to start in April.