2022 Growth Outlook: Sales +28.7% YoY, OP +44.2% YoY
The authors are analysts of Shinhan Investment Corp. They can be reached at jhwon@shinhan.com and shawn1225@shinhan.com, respectively. -- Ed.
4Q21 review: Record-high sales driven by strong seasonality
Jeisys Medical posted consolidated sales of KRW22.4bn (+46.6% YoY) and operating profit of KRW5.7bn (+141.8% YoY, operating margin of 25.4%) for 4Q21, meeting consensus estimates. The company saw strong YoY growth in earnings from radio frequency (RF) devices and consumables, backed by peak season demand in the global medical aesthetics market. Operating margin decreased by 4.0%p QoQ, due to: 1) bonus compensation provided to global partner Cynosure for meeting the minimum order quantity of POTENZA (microneedling RF device); 2) employee bonuses at the parent company and Japanese subsidiary; and 3) advertising expenses booked for the launch of non-invasive microneedle tips for POTENZA.
Sales of consumables surged 63% YoY to KRW10.9bn on growth in global device sales, a leading indicator of consumables sales, and subsequent increase in number of aesthetic procedures carried out in 4Q21. Sales of RF devices reached KRW5.1bn (+94% YoY), backed by solid sales in North America and strong marketing effect in the domestic market. Sales of high-intensity focused ultrasound (HIFU) devices fell slightly by 13% YoY to KRW2.6bn, due to deferred demand ahead of the release of a new product in Korea and Japan this year.
2022 growth outlook: Sales +28.7% YoY, OP +44.2% YoY
For 2022, we forecast sales at KRW104.6bn (+28.7% YoY) and operating profit at KRW33.2bn (+44.2% YoY, operating margin of 31.7%). Earnings growth in 2022 is expected from successful expansion in the US market with POTENZA, which offers monopolar and bipolar RF treatments in a single platform and customization with roughly 10 types of microneedle tips. Based on the successful track record built up in the US, the world’s largest market for medical aesthetics devices, Jeisys Medical should also start to record massive shipments to Cynosure in 2022. Cumulative sales volume of major devices exceeded 3,000 units in 2021, and the continuing uptrend in device sales will lead to growth in consumables sales in steps going forward.
TP unchanged at KRW10,000; new products to drive further growth
We retain our BUY rating on Jeisys Medical for a target price of KRW10,000. The company is seen attractive on expectations for: 1) solid sales and expansion of global sales channels for major products; and 2) additional sales from the launch of new HIFU and RF products in 2022.