Diagnostic Kit Stocks Begin to Separate the Wheat from the Chaff

Foreigners Net Buy Seegene 66.6 Billion Won on the 14th Alone... Sharp Reversal from Selling Pressure
Swift Response to COVID-19 Resurgence... Selecting Stocks with Excellent Export Performance

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[Asia Economy Reporter Minwoo Lee] As the novel coronavirus infection (COVID-19) resurges, attention is once again focusing on diagnostic kit stocks. Unlike before, since corporate earnings are now being disclosed, it is analyzed that a process of distinguishing the wheat from the chaff is underway.

According to the Korea Exchange on the 18th, foreign investors net purchased 66.6 billion KRW worth of Seegene shares on the 14th. This was the largest net purchase by foreigners across both KOSPI and KOSDAQ on that day. It was more than twice the amount of the second and third places, Celltrion (28.1 billion KRW) and Emart (12.9 billion KRW). This is the second-largest daily net purchase by foreigners of Seegene this year. Although there had been four consecutive trading days of net selling from the 7th to the 12th, the mood has recently reversed sharply. Foreign buying also poured into diagnostic kit stock LabGenomics, with purchases of 7.5 billion KRW and 7.7 billion KRW on the 13th and 14th respectively. This is the largest daily net purchase so far this year.

As COVID-19 rapidly resurged mainly in the metropolitan area, foreigners are interpreted to have responded swiftly. According to the Central Disease Control Headquarters, as of midnight on the 18th, the number of new COVID-19 confirmed cases was 246. For five consecutive days since the 14th, triple-digit cases have been recorded, with 991 additional confirmed cases. The cumulative number of infections stands at 15,761.

However, unlike before, diagnostic kit stocks are showing mixed fortunes depending on their earnings. Since companies’ export performances have been released, investment is concentrated mainly on companies that have delivered actual results. According to the Korea Customs Service, the export amount of diagnostic kits in July, as of the reporting date, was 136.64 million USD (approximately 162.3 billion KRW). This represents a 605% increase compared to the same period last year but an 18.6% decrease compared to the previous month. After peaking at 267.06 million USD in April, exports have been declining monthly by -29.4% in May and -10.9% in June.

Despite this situation, the 'leading stock' Seegene performed well. The export amount of diagnostic kits from Songpa-gu, Seoul, where Seegene is located, was 48.12 million USD as of the shipment date in July. This was actually a 3.0% increase compared to the previous month. This suggests that Seegene can surpass the record-breaking performance achieved in the second quarter. Earlier, Seegene reported consolidated sales of 274.8 billion KRW and operating profit of 168.9 billion KRW in Q2 this year. Compared to the same period last year, sales increased 12.3 times and operating profit increased 49.6 times, marking the highest performance ever.

On the other hand, export performance in Anyang-si, Gyeonggi-do, where Osang Healthcare is located, dropped by 76.7% compared to the previous month. This contrasts with April, when export amounts were similar to those of Songpa-gu, Seoul. Foreign buying sentiment is also sluggish compared to Seegene. In the case of Osang Healthcare’s parent company Osang Jaiel, foreigners net purchased 1.3 billion KRW on the 11th but immediately net sold 700 million KRW on the 12th. Afterwards, they net purchased 800 million KRW on the 13th but sold another 100 million KRW on the 14th. Minjeong Sun, a researcher at Hana Financial Investment, interpreted, "As the spread of COVID-19 has become somewhat familiar, unlike before, diagnostic kit manufacturing companies are now being sorted out."

This content was produced with the assistance of AI translation services.