[Edaily Reporter kyoungeun kim ] Daol Investment & Securities maintained its “Buy” rating on PharmaResearch(214450)and slightly raised its target price from 530,000 won to 540,000 won. This is because investments in Rejuran branding and marketing are driving growth in the cosmetics division, and revenue is projected to exceed market expectations. The stock has upside potential of 77.3% relative to its current price (304,500 won).
Park Jong-hyun, an analyst at Daol Investment & Securities, stated, “Although we expect the operating profit margin (OPM) to decline slightly due to marketing investments, we anticipate a gradual improvement in OPM driven by operating leverage.”
Projected second-quarter results are revenue of 175.8 billion won (up 25% year-over-year, up 20% quarter-over-quarter) and operating profit of 67.5 billion won (up 21%, up 18%). Revenue is expected to exceed the consensus estimate, while operating profit is expected to meet it.
By segment, domestic medical device sales are expected to reach 64.6 billion won, representing a 6% year-over-year increase and an 11% quarter-over-quarter increase. Analyst Park explained, “With spending on dermatology services for medical tourism reaching 140.8 billion won and 145.2 billion won in April and May, respectively—representing year-over-year growth of 63% and 86% and setting new all-time highs—the upward trend in dermatology spending is expected to continue, driven by the effects of inbound tourism and the wealth effect from domestic consumption.”
In addition, the cosmetics sector is emerging as a key driver of earnings growth. Second-quarter domestic cosmetics sales are expected to reach 180억 won, representing a 60% year-over-year increase and an 18% quarter-over-quarter increase. Increased business-to-consumer (B2C) duty-free sales driven by the influx of inbound tourists, along with rising sales through health and beauty (H&B) channels, are contributing to this earnings growth. Exports are expected to reach 400억 won, up 105% year-over-year and 49% quarter-over-quarter.
Analyst Park stated, “Amid a trend of rising sales in Southeast Asian and Eastern European channels, revenue growth driven by the company’s entry into Sephora stores in the U.S. and China, as well as channel expansion, is contributing to overall earnings growth.” Export figures for April and May grew by 69% and 64%, respectively, compared to the same periods last year.
Analyst Park emphasized, “The cosmetics division, anchored by the Rejuran brand, is showing rapid growth. While OPM is expected to decline due to Chonbang marketing efforts, a gradual improvement in OPM is anticipated as a result of operating leverage.”