"L&C Bio Soars 120% in Just Two Weeks: 'Today Is the Lowest Price'... Stock of the Week Sensation" [Stock of the Week]

Stock Price Soaring Vertically This Month
Spotlight on Next-Generation Skin Booster "Re2O"
Costs Rising, but Profitability Expected to Improve Soon
Securing Growth Drivers: China Market and Arthritis Treatment

Editor's NoteTo all individual investors dreaming of successful investments: How well do you really know the stocks you buy with your own money? In an online environment overflowing with unfiltered information, Asia Economy aims to become your hands, feet, eyes, and ears, delivering accurate information about companies. Each week, we focus on companies that rank at the top of FnGuide's stock search list, providing everything from basic information to analyses of related companies such as partners, clients, and investors. We will break down the financial status, performance, and future value of these companies in an easy-to-understand manner. Under the name "Stock of the Week," we will bring you these highlights every week.

"Today's high is tomorrow's low."

"A challenger to PharmaResearch's valuation."

"This is more than just simple anticipation."

These are recent assessments from the securities industry regarding L&C Bio, a company specializing in regenerative medicine. L&C Bio topped FnGuide's most-searched stocks last week, proving strong investor interest. As expectations for revenue growth through next-generation skin boosters rise, the company is also attracting market attention by securing mid- to long-term growth drivers such as expansion into China and treatments for degenerative arthritis.

Skin Booster Powerhouse: 120% Surge in Just Two Weeks

Founded in 2011, L&C Bio manufactures and sells human tissue grafts for skin, bone, and cartilage, as well as human tissue-based medical devices, pharmaceuticals, cosmetics, and health supplement CRO services. The company experienced rapid growth after successfully localizing skin grafts that were previously dependent on imports. With "Megaderm," which minimizes immune reactions and side effects in the human body, L&C Bio quickly captured the No. 1 market share in domestic skin grafts and was listed on KOSDAQ in 2018.

On September 15, L&C Bio closed at 64,700 won on the KOSDAQ market. This represents a 120% increase compared to the closing price of 29,400 won on September 1. After trading in the 20,000-30,000 won range throughout the year, the stock price surged sharply this month. In particular, strong institutional buying pushed trading volume to its highest level of the year.

The driving force behind this rapid vertical surge is the new skin booster product "Elravie Re2O (Re2O)." While existing skin boosters only induce collagen production in the skin, Re2O directly replenishes the extracellular matrix (ECM)-a key component of the dermis-rapidly and fundamentally improving skin elasticity. As a result, it is being recognized as the next-generation skin booster following the previous leader, "Rejuran."

The number of clinics and hospitals offering Re2O treatments has doubled from 500 in July last year to 1,000 currently. Based on a domestic commercialization and distribution rights agreement with Huons Meditech in November last year, the company expects to expand to about 2,000 channels by the end of this year. In the third quarter, new product lines for under-eye, neck wrinkle, and scar improvement are also scheduled for launch. This has fueled expectations that the company will exceed its sales targets of 3 billion won this year and 10 billion won next year. Lee Seungeun, a researcher at Yuanta Securities, commented, "The rapid market penetration of Re2O is raising expectations for sales growth. Despite the short-term surge, strong expectations for further performance momentum are highlighting a growth premium over valuation concerns."

The securities industry believes that this growth trajectory rivals the boom experienced by PharmaResearch, the developer of Rejuran. Lee Chaeun, a researcher at Eugene Investment & Securities, explained, "In 2019, when PharmaResearch began to see revenue growth in its medical device division, the skin booster market was just emerging. Now, growth is being driven not only by domestic demand but also by inbound demand from tourists and overseas expansion." She added, "Reflecting the market's growth potential, we are applying a 10% premium to the average 2019 multiple." She set a target price of 68,000 won, indicating significant upside potential.

Securing the China and Degenerative Arthritis Markets: Bright Mid- to Long-Term Outlook

The company's mid- to long-term growth momentum is also being highlighted through its full-scale entry into the Chinese market. In January this year, L&C Bio obtained approval from China's National Medical Products Administration (NMPA) for its skin graft medical device "Megaderm Plus," with revenue recognition expected to begin as early as the second half of this year. Furthermore, if the Kunshan plant in China, completed in December 2022 with a production capacity of about 1 trillion won, receives final government approval, large-scale revenue expansion is anticipated from 2027.

To advance overseas, L&C Bio established a joint venture, L&C China, with China International Capital Corporation (CICC), the largest investment bank in China, in 2020. At the end of last year, L&C Bio acquired all of CICC's shares, making L&C China a wholly owned subsidiary. While increased marketing costs for expanding the sales network in China present a risk of continued losses, these investments are expected to play a crucial role in future growth momentum.

Interest is also growing in "Megacarti," a medical device for degenerative arthritis. This treatment, which is applied to damaged knee cartilage to promote regeneration, is currently designated under the New Health Technology Assessment deferral system and is used in 235 hospitals nationwide for patients aged 19 to 60. It has received positive feedback from surgeons, and expectations for growth are high. Kim Hyungyeom, a researcher at KB Securities, stated, "We are pursuing a strategy to expand the applicable age range to 65 in the main assessment. If reimbursement becomes possible after the main assessment, Megacarti, along with Re2O, is expected to become a key driver of sales growth."

L&C Bio's operating profit has been on a downward trend since 2022. After recording a single-digit operating margin last year, the company posted an operating loss of 400 million won in the first half of this year, turning to the red. In the second quarter alone, the operating loss was 200 million won. On the other hand, consolidated sales for the first half of this year reached 38.3 billion won, up 11.3% year-on-year, and second-quarter sales were 20.6 billion won, up 15.0%.

Regarding this, researcher Kim commented, "Profitability has declined due to increased spending from domestic and overseas business expansion, but attention should be paid to future sales growth." Researcher Lee Chaeun also noted, "Starting this year, the company has shifted its domestic sales strategy from agency sales to direct sales, and as the Chinese subsidiary begins to generate significant revenue, the operating loss can be reduced. In addition, the rapid increase in demand for Re2O will greatly contribute to improving the operating margin."