[Click eStock] "Dentium, Full-Scale Recovery of Exports to China Region"

[Asia Economy Reporter Eunmo Koo] NH Investment & Securities forecasted that Dentium's second-quarter earnings this year will slightly underperform market expectations. Although the impact of the novel coronavirus disease (COVID-19) is inevitable, it is expected that the recovery in sales in domestic and Chinese markets will offset the decline in sales in other regions. The company is evaluated to be worth anticipating the effects of deferred demand centered on domestic and Chinese markets and operating leverage in the second half of the year. The investment opinion and target price were maintained at 'Buy' and 50,000 KRW, respectively.

On the 16th, NH Investment & Securities estimated that Dentium's consolidated sales for the second quarter would record 56.1 billion KRW, down 18.6% from the same period last year, and operating profit would decrease by 40.4% to 9.2 billion KRW. These figures are 5.8% and 6.9% below market expectations, respectively. Researcher Gwanjun Na of NH Investment & Securities explained in a report on the same day, "Although the impact of COVID-19 is inevitable, the recovery trend in sales in the domestic and Chinese regions, which account for a large portion of sales, is expected to offset the decline in sales in other regions such as Russia and India."

He added, "Currently, the manufacturing plant in China is suspended, but the larger manufacturing plant in Vietnam is operating normally," and "An improvement in operating profit margin is expected due to reduced fixed cost burden from overall sales recovery and decreased expenses such as advertising and commission fees." Furthermore, he said, "Dental cone-beam computed tomography (CBCT) equipment, which successfully obtained product approval in China last year, is expected to be supplied to the Chinese market starting in the second half of the year," and "It is worth anticipating the effects of deferred demand centered on domestic and Chinese markets and operating leverage in the second half of the year."

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