[Hidden Market Picks] InBody: Earnings point to steady growth

2018.01.18 16:09:54 | 2018.01.25 11:29:58

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Shares of InBody Co.(Kosdaq: 041830), South Korea’s dominant maker of electronic medical devices with no local competition, are directed northbound.

Mirae Asset Daewoo on Thursday upped its price target for InBody to 52,000 won ($48.57) from 42,000 won, forecasting the company’s operating margin in the upper 20 percent and an annualized sales growth of 21.9 percent over the next three years.

The Korean investment bank projected that InBody’s operating profit in the fourth quarter ended December will reach 7.1 billion won, up 65 percent from the year-ago period. Sales are also expected to come above market expectations to hit a quarterly record of 26.1 billion won, up 29.6 percent from a year earlier.

Operating profit for full 2017 is forecast to be 24.4 billion won on sales of 92.4 billion won. Its operating profit for this year is projected to jump to 31.0 billion won on sales of 112.4 billion won.

As of 2:22 p.m., shares of InBody were down 0.35 percent at 42,350 won.

InBody is widely known for developing the InBody test, a comprehensive analysis of body composition balance that provides a more accurate measurement of body fat percentage than traditional devices.

InBody’s recent share price has surged 58.9 percent compared to its latest low in October 2017. Its price-to-earnings ratio (PER) stands at 23.5x, higher than the industry average of 20.3x. But it’s hard to make a comparison as the company is pioneering a new market that has no direct competition. Backed by steady demand, medical device manufacturers are often capable of achieving higher growth compared to companies in other industries, with some innovative medical device players posting a P/E ratio of 40-50x.

InBody’s three major overseas entities in Japan, China and the United States are expanding by 20-30 percent annually and the growth in their sales are expected to continue to grow thanks to steady demand in hospitals and fitness centers. The company also expects sales in Europe to pick up this year. Korea accounts for 23 percent of total sales, China 22 percent, the U.S. 17 percent and Japan 13 percent.

For more information, please contact Kim Choong-hyun, analyst at Mirae Asset Daewoo, by phone at 82-2-3774-1740 or email [choonghyun.kim@miraeasset.com]. You can also visit Financial Supervisory Service (http://englishdart.fss.or.kr/) for Company details and latest quarterly report (search code: InBody or 041830). For latest trading data, please visit Korea Exchange (http://englishdart.fss.or.kr/) and search under InBody or 041830.

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