[Market Focus] Dentium's Q1 Operating Profit Halved... Shares Also Fall

As of 9:20 a.m. on May 9, shares of Dentium, an implant manufacturer, were trading at 68,300 won on the Korea Exchange, down 11.41% from the previous day's closing price. This decline appears to be driven by the company's first-quarter earnings announcement, which fell far short of market expectations, as well as a securities report that downgraded its investment rating.

The previous day, Dentium reported its preliminary consolidated first-quarter results, posting sales of 76.8 billion won and operating profit of 9.6 billion won. Sales were down 7.1% year-on-year, while operating profit dropped by 50.2%. According to Kiwoom Securities, operating profit was 53.6% lower than the market consensus. The first-quarter operating margin was 12.5%, marking the lowest level since the first quarter of 2020, when the impact of COVID-19 was at its peak.

Shin Minsoo, an analyst at Kiwoom Securities, who lowered the target price from 80,000 won to 70,000 won and the investment rating from 'Buy' to 'Marketperform', explained, "Sales of implants in China and the domestic market experienced negative growth, which impacted overall revenue." He added, "Due to sluggish industry conditions, accounts receivable were not properly collected, and 3.1 billion won was recognized as bad debt expense."

He further noted, "Align Partners, which was established in 2021 and has conducted activist campaigns targeting several domestic listed companies, disclosed on March 31 that it holds 793,876 shares (7.2%) of Dentium." He added, "This can be interpreted as an effort to resolve issues such as the high 22.1% treasury stock ratio and matters related to corporate governance."

Dentium's share price reached as high as 85,500 won during intraday trading on April 1, but has since fluctuated between the 60,000 and 70,000 won range.