Increase in Diagnostic Kit Exports... Could It Signal a Stock Price Revival?

Rising Expectations for Earnings Amid Global Spread of COVID-19

In April, 5,000 Korean-made diagnostic kits for COVID-19 testing were delivered to Madagascar, an island nation in the Indian Ocean, with support from the Korean government. (Photo by Yonhap News)

[Asia Economy Reporter Kum Boryeong] As overseas exports of COVID-19 diagnostic kits turned to an increasing trend in August, market attention is focused on whether stock prices can revive.

According to the Korea Customs Service on the 2nd, the provisional export amount of diagnostic kits last month was $93.06 million, an increase of 1980% compared to the previous year. Compared to the export amount of $67.56 million in July, it increased by 35%. The export amount of diagnostic kits showed a decrease compared to the previous month from May to July after reaching a peak in April. Eventually, in July, it was adjusted to about 49% of the April level.

The increase in diagnostic kit exports from August is due to the daily number of COVID-19 confirmed cases in some European countries rising again to the levels seen in March and April, when the peak occurred. Spain recorded daily confirmed cases of 9,658 on the 27th and 9,779 on the 28th of last month, surpassing the high points of March and April. France also showed similar figures to March and April with 7,379 new confirmed cases on the 28th of last month.

Sun Minjeong, a researcher at Hana Financial Investment, analyzed, "The daily confirmed case graphs of Spain and France form a perfect U-shape," adding, "Considering that the cumulative regional shares of diagnostic kit exports from March to August, when exports increased, were 17% in South America and 29% in the European market respectively, the recent increasing spread in these countries could lead to an increase in diagnostic kit exports by domestic companies."

As the bubble around diagnostic kits deflated, a selection of companies was also underway. The stock price of Seegene, the leading company in diagnostic kits, fell by 18.48% from 312,200 KRW on the 7th of last month to 254,500 KRW on the 1st, about three weeks later. During the same period, Sugentech also dropped by 29.63%, from 53,500 KRW to 37,650 KRW.

However, as the export amount has turned to an increasing trend again since last month, expectations for the performance and stock prices of diagnostic kit companies are expected to rise again. In particular, there is an analysis that Seegene does not need to worry about a sharp performance slowdown in the second half of the year. Mirae Asset Daewoo estimated Seegene's performance for the second half of this year at sales of 401.5 billion KRW and operating profit of 230.2 billion KRW.

The key in the future is the development of diagnostic kits that can simultaneously test for mutant COVID-19 strains, influenza virus, and COVID-19. Kim Choonghyun, a researcher at Mirae Asset Daewoo, explained, "As more than eight months have passed since the outbreak of COVID-19 after September, demand for mutant COVID-19 kits has begun to emerge," adding, "With the flu season in the fourth quarter, demand for kits that integrate influenza virus and COVID-19 virus testing is expected to increase."

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