[Click eStock] "Dio Achieves Simultaneous Performance and Financial Structure Improvement...Entering Turnaround Phase"

On December 16, Hana Securities analyzed that Dio has entered a full-fledged turnaround phase, simultaneously improving its performance and financial structure, particularly in global strategic markets.

Han Yugun, a researcher at Hana Securities, stated, "In the third quarter of this year, Dio recorded sales of approximately 41.4 billion won and operating profit of 4.16 billion won, continuing its growth from the second quarter." He added, "Considering the overall business flow, this quarterly profit growth signals a green light for annual growth in 2026." Sales increased by 32.2% year-on-year, while operating profit surged more than ninefold.

The main driver of third-quarter performance growth was the expansion of overseas sales, particularly in China, the Middle East, and the CIS region. Sales to China alone reached about 10.1 billion won, up 62% year-on-year, with cumulative sales to China exceeding 30 billion won through the third quarter. Dio also saw average sales growth of over 30% in its key global strategic regions, including India, Portugal, T?rkiye, and Russia. Han noted, "Given that the standalone segment faced an unfavorable environment due to the economic downturn, these results are quite encouraging."

The background behind Dio's turnaround includes the reorganization of its sales network, restructuring effects, and increased penetration into overseas markets. Han explained, "The biggest factors expected to drive the turnaround are the reorganization of the sales network, restructuring effects, and increased overseas market penetration." He added, "The strategy of reorganizing the distribution network in China-establishing directly operated stores in Tier 1 and Tier 2 cities and focusing on agents in Tier 3 and below-has proven effective." As a result, local brand awareness and market share are rapidly expanding, and this year's sales to China are expected to reach about 42.5 billion won, an 83% increase from the previous year.

This growth trend is not expected to be limited to China. Dio is expanding its sales organization into eastern India and the Ankara and Kocaeli regions of T?rkiye, while significant sales growth is also anticipated in Russia through a transition to regional dealers. Han stated, "The strengthening of the sales organization is beginning to have a tangible impact across all global strategic markets."

Performance improvement is also expected to lead to a stronger financial structure. Han said, "Through intensive restructuring, including strengthening the sales organization, system renewal, and new product launches, Dio's financial structure will be significantly improved by 2026." While concerns remain about China's healthcare cost reduction policies and the second round of VBP (Volume-Based Procurement), Dio is proactively responding by establishing a mid- to low-priced economic lineup.

This economic lineup is scheduled to begin full-scale production in China from 2026. Although the average selling price per unit is not higher than existing products, it is expected that securing new volumes will enable overall volume growth. Han explained, "Securing new volumes through the second round of VBP will sufficiently drive an increase in Q," adding, "If the Chinese factory stabilizes, exports to Europe and the Middle East will also be possible, leading to expected logistics cost savings."

Reflecting these assumptions, sales to China in 2026 are projected to reach approximately 56 billion won, a 31.7% increase from the previous year. T?rkiye, Portugal, and Mexico are also expected to post annual growth rates of over 30%. In addition, cost control measures such as the completion of logistics center relocation, reduction in TV advertising expenses, decreased provisions, and stabilization of accounts receivable collection periods are expected to further accelerate profitability recovery.

Hana Securities has projected Dio's 2026 performance at 208.9 billion won in sales and 26.5 billion won in operating profit. These figures represent year-on-year increases of 26.5% and 89.7%, respectively, with the operating margin expected to improve to 12.7%. Han concluded, "Overall, Dio is expected to show meaningful improvements in performance, financial structure, and profitability indicators, and a sharp improvement in ROE is also anticipated."