X-ray Detector and Industrial Camera Manufacturer

The authors are analysts of Shinhan Investment Corp. They can be reached at snowKH@shinhan.com and swoong92@shinhan.com, respectively. -- Ed.

 

X-ray detector and industrial camera manufacturer

Vieworks focuses on providing imaging solutions for medical and industrial applications. Mainstay products include X-ray detectors, which convert X-rays into a visible image, and industrial-use cameras. In 2020, the company is expected to generate 46% of total sales from detectors (FP+RF), 29% from industrial cameras, 13% from dynamic detectors, and 12% from other products.

Diversification + COVID-19 boost leads to 16% YoY growth in medical solution sales

Demand growth fueled by the COVID-19 pandemic will likely help to prevent the downturn in detector ASP levels from the inflow of new market entrants. The outbreak has driven up demand for detectors in screening clinics and isolation wards. Demand for portable FP detectors is on the rise in both domestic and overseas markets. As a result, Vieworks should see detector (FP+RF) sales reach KRW72.5bn (+7% YoY) in 2020.

The company’s diversifying product portfolio also deserves attention. Advancements in diagnostic radiology is adding a boost to demand for high-end digital imaging equipment. In addition, non-destructive testing (NDT) can be used in a wide range of industrial applications (inside buildings, airport security checkpoints, etc.). Expansion of customer base from 2Q20 and strong market response to dynamic detectors for dental imaging further add to the positives for Vieworks. Dynamic detector sales are forecast at KRW19.6bn (+64% YoY) for full-year 2020.

2020 growth outlook: Sales +16% YoY, OP+27% YoY

Full-year 2020 sales are projected at KRW157.1bn (+16% YoY) and operating profit at KRW33.5bn (+27% YoY). Operating profit margin should reach 21.3% (+1.9%p YoY). Vieworks shares are currently trading at a 2020F PER of 11.8x. Investment points for 2020 are: 1) growth in demand for detectors fueled by the COVID-19 pandemic; and 2) product portfolio diversification. With earnings growth likely to take off from 2020, we expect to see a re-rating of shares going forward.

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