The author is an analyst for NH Investment & Securities. He can be reached at pk.park@nhqv.com -- Ed.
Classys’s 3Q23 OP exceeded consensus, reaching W24.7bn. The firm’s is still in a re-rating phase, led by an increasing equipment sales portion both domestically and internationally. Costs are expected to increase in 4Q23, but in 2024, both equipment and consumables sales should grow, and OP is estimated at W111.4bn.
Equipment sales proportion expansion to continue
We maintain a Buy rating and TP of W45,000 on Classys. The firm booked strong 3Q23 results, exceeding consensus, including sales of W48.2bn (+45% y-y) and OP of W24.7bn (+41% y-y).
Overseas: The proportion of overseas equipment sales reached 62%, the highest level this year. Centering on Brazil, which accounts for 28% of total sales, we estimate that 350 Shurink Universe units were sold (W27mn/unit), 335 Shurink units (W20mn/unit), and 30 Volnewmer units (W54mn/unit), with full-year sales predicted at 1,275 units, 1,245 units, and 90 units, respectively. Peak sales of HIFU equipment in Brazil are estimated at 9,000 units (cumulatively sold 2,800 units), and Thailand, a market two to three times larger than Korea, is another promising country for the company.
Domestic: The proportion of domestic equipment sales also expanded to 52%, led by Volnewmer devices. Through joint marketing for Volnewmer and Shurink Universe, cumulative domestic sales of Volnewmer are estimated at 265 units, with a maximum peak market predicted at 1,100 units.
We forecast 4Q23 sales of W50.6bn (+25% y-y) and OP of W23.6bn (+21% y-y). Equipment sales should continue to rise, despite low seasonality for dealers. Ad expenses fell in 3Q23, but are likely to climb back up to the 2Q23 level in 4Q23 due to online and outdoor advertising, and planned symposiums.
Both equipment and consumables sales to rise in 2024
We forecast 2024 sales of W219.5bn (+20% y-y) and OP of W111.4bn (+22% y-y). The proportion of equipment sales out of total overseas sales should climb to 58%, led by Thailand and Brazil, while total consumable sales are expected to reach W103.8bn (+27% y-y) thanks to strong equipment installations in 2023. Solid multiples should be sustained through a high equipment sales proportion and strong consumables sales.