[Edaily Reporter Kim Hyung-il ] NH INVESTMENT & SECURITIES analyzed that CLASSYS Inc.(214150)is facing growing short-term earnings uncertainty due to continued weakness in both the domestic and Brazilian markets. Accordingly, while maintaining its “Buy” rating, the firm lowered its target price to 48,000 won, a 28% reduction from the previous level.

On the 23rd, Park Hye-sung, an analyst at NH INVESTMENT & SECURITIES, estimated CLASSYS Inc.’s consolidated revenue for the third quarter of this year at 99.4 billion won and operating profit at 40.5 billion won. While revenue is expected to increase by 20% year-over-year, operating profit is projected to fall approximately 15% short of the market consensus. The operating profit margin is estimated at 41%.

The domestic market continues to struggle due to a combination of the seasonal off-peak period and intensifying competition. In addition to fiercer competition in the monopolar radiofrequency (RF) equipment sector, the number of shots used per procedure has decreased due to an increase in combined procedures, and the concentration of inbound demand on high-priced original equipment has also acted as a burden.

CLASSYS Inc. plans to respond by accelerating the launch of upgraded equipment next year and strengthening its marketing strategy—utilizing its proprietary combined procedure protocols—starting in the fourth quarter of this year. The Brazilian market also remains a factor contributing to weak performance, as the return to normal business operations has been delayed and competition has intensified.

NH INVESTMENT & SECURITIES viewed it as uncertain whether CLASSYS Inc. would achieve its revenue guidance for this year. Although CLASSYS Inc. had previously revised its annual revenue guidance downward during its second-quarter earnings announcement, Analyst Park presented a conservative estimate of annual revenue at 412 billion won. This figure falls short of even the lower end of CLASSYS Inc.’s guidance, which is 430 billion won. The analysis indicated that the strong won, the seasonal off-peak period, and sluggish performance in the domestic and Brazilian markets are expected to impact earnings.

He identified new product approvals in China and the U.S. as key factors for a turnaround in the stock price. CLASSYS Inc. maintains its goal of obtaining approval for Volnume in China and launching the product within this year. Next year, the company aims to secure approval for Ultraformer MPT (Shrink Universe) in both China and the U.S.

In addition to the sluggish domestic and Brazilian markets, the CLASSYS Inc. stock price has been trending downward as valuations across the aesthetic medicine sector continue to decline. However, NH INVESTMENT & SECURITIES believes that if new product launches and entry into new markets proceed as planned, growth momentum could become visible starting next year.

Analyst Park stated, “Our proprietary estimate of CLASSYS Inc.’s 12-month forward price-to-earnings ratio (PER) stands at 12x, which is below even its historical low,” adding, “We set the target price by adjusting the valuation benchmark to the average of the second major uptrend and applied a 20% discount rate to account for concerns regarding the largest shareholder’s exit.”