[Click eStock] "T&L Target Price Lowered on U.S. Tariff Concerns"

"Long-Term Growth Potential Remains Intact"

On July 8, SangSangin Securities stated that T&L is inevitably facing short-term downward pressure on its performance due to the possibility of U.S. tariffs, and therefore lowered its target price from 110,000 won to 96,000 won. However, considering the company's long-term growth potential, the brokerage maintained its 'Buy' investment rating.

T&L's consolidated sales for the second quarter of this year are estimated at 45.3 billion won, down 17.5% year-on-year, with operating profit at 15.8 billion won, down 23.7%, and an operating profit margin (OPM) of 34.9%. Ha Taegi, a researcher at SangSangin Securities, explained, "The decline in the exchange rate had an impact, and the sharp increase in exports to the U.S. in the first quarter ahead of the tariff imposition also played a complex role."

By product category, exports of wound dressings are estimated to have decreased in the second quarter, and third-quarter export projections have also been revised downward. For hydrocolloids, second-quarter export sales are estimated at 31.7 billion won, a 15.0% decrease year-on-year. Reflecting ongoing uncertainty regarding U.S. exports due to tariffs, the company assumed there would be discounts on supply prices to its U.S. distributor (C&D) and accordingly revised down its U.S. export projections for the third quarter.

Sales in Europe, which are not affected by tariffs, and new microneedle products (supplied to the U.S. as ODM) are expected to continue increasing steadily.

Although there are negative factors in the short term, the company believes that it can overcome the impact of tariffs in the long term and achieve corporate value growth through increased performance. Researcher Ha commented, "Even if tariffs are imposed, if the final price increase is small, sales volumes of Mighty Patch in the global market are likely to continue their strong upward trend. While profitability may deteriorate slightly due to tariffs, the increase in sales volume should mean there is little impact on the company's long-term growth outlook."

He added, "From a long-term perspective, product quality and competitiveness are the most important variables. While share price volatility may occur in the short term due to performance fluctuations, it is expected that the company can overcome this and maintain an upward trend in the long run."