[Click e-Stock] "PharmaResearch Has Ample Potential for Stock Rebound on Rejuran and Overseas Achievements"

On November 12, Daishin Securities commented on PharmaResearch, stating, "Although the stock price is currently in a correction phase due to institutional selling amid recent weakness in the K-beauty and consumer goods sectors, the company's growth story remains intact, with the establishment of order for the Rejuran brand and visible achievements overseas." The firm assessed that there is ample potential for a stock price rebound once market sentiment recovers.

Hansong Hyup, a researcher at Daishin Securities, maintained a 'Buy' investment rating on PharmaResearch in a report released the same day, but lowered the target price by 22% to 7 million won. This is based on applying a more conservative multiple, specifically a 12-month forward price-to-earnings ratio (12M Forward PER) of 32.9 times-a 20% discount compared to the global aesthetic medicine company Galderma (41.2 times). Over the past three months, the stock price has fallen by 35%, lowering the 12M Forward PER to 21 times.

However, the researcher noted, "PharmaResearch has a clear track record of quarterly earnings exceeding guidance and market expectations, and in the fourth quarter, earnings momentum is expected to resume due to the seasonal peak and the return of medical professionals."

PharmaResearch posted record profitability in the third quarter of this year, despite its first quarter of declining sales. Third-quarter revenue was 135.4 billion won (up 52% year-on-year, down 4% quarter-on-quarter), operating profit was 61.9 billion won (up 77% year-on-year, up 11% quarter-on-quarter), and the operating profit margin (OPM) was 46%, in line with consensus estimates (revenue of 143.4 billion won, operating profit of 60.2 billion won).

The reasons behind the decline in sales were as follows: for the domestic medical device business, revenue fell by 6% quarter-on-quarter due to a temporary shortage of medical staff as residents returned to work; for the export medical device business, sales dropped by 19% due to a temporary adjustment resulting from a policy to block distribution in unapproved regions. In contrast, the cosmetics division grew by 14%, maintaining domestic growth centered on hospital channels.

In terms of profitability, the company achieved a record gross profit margin (GPM) of 81% and OPM of 46%. The rise in GPM is expected to normalize in the future, as it was a temporary accounting effect from increased sales at subsidiaries (DRJ and Medicuson). However, the achievement of a 46% OPM reflects reduced expenses, such as advertising costs, compared to the first half of the year.

The researcher expects a reacceleration in earnings in the fourth quarter and in 2026, citing the successful entry into the European market as a key variable. In the fourth quarter, both revenue and operating profit are expected to reach record highs due to the resolution of the medical staff shortage and seasonal peak effects. While OPM may temporarily decrease due to increased advertising and promotional expenses (similar to the second quarter, approximately 17 billion won), overall growth is expected to reaccelerate, driven by the domestic peak season and initial shipments to Europe (about 2 billion won across five countries). He identified the successful entry into the European market as the key variable for 2026, and judged that with the full-scale expansion of global exports, it will be possible to maintain an annual revenue growth rate of 20-25%.