[Click e-Stock] "Classys: Increasing Earnings Growth Visibility"

On January 6, LS Securities raised its target price for Classys to 70,000 won, citing expectations of continued stepwise growth driven by full-fledged expansion in the United States and Europe.

Jo Eunae, a researcher at LS Securities, stated, "We are maintaining our 'Buy' investment opinion on Classys and raising the target price to 70,000 won. This reflects upward revisions to our earnings forecasts and target multiple (applying a 20% premium to the 2026E PER average of 18x for PharmaResearch and Hugel, in recognition of increased earnings growth visibility)."

Classys is expected to post fourth-quarter sales of 95.7 billion won and operating profit of 50.3 billion won for last year. These figures represent year-on-year growth of 29% and 41%, respectively.

Researcher Jo explained, "Uncertainty surrounding sales in Brazil has been resolved following the decision to acquire the local distribution partner in October last year, and monthly sales are now in the process of normalizing."

She added, "In the first year since entering the U.S. market, Volnewmer's annual sales volume in 2025 is expected to exceed 300 units, with quarter-on-quarter growth continuing in the fourth quarter. In Europe, both MPT and Volnewmer sales are also maintaining quarter-on-quarter growth, and the combined annual sales volume in the U.S. and Europe is projected to surpass 800 units in 2025."

Classys's expected sales for this year are 455.1 billion won, with operating profit estimated at 234.8 billion won. These figures are projected to increase by 34% and 44%, respectively, compared to last year.

Researcher Jo explained, "Once the acquisition of the Brazilian distribution subsidiary is completed, the basis for recognizing equipment sales will shift from wholesale prices to final supply prices for consolidated sales, which is expected to have a positive effect on revenue. However, due to the operating costs of the local subsidiary, the consolidated margin rate is expected to decline."

She continued, "Nevertheless, we do not view the change in profit structure from consolidating the Brazilian distributor as a negative factor for expected consolidated operating profit. If future sales growth in Brazil exceeds expectations, it could provide additional profit growth through operating leverage."