[Click eStock] "Novarex, Positive Outlook on Fundamentals and Growth Prospects This Year"

Daishin Securities Report

[Asia Economy Reporter Gong Byung-sun] Daishin Securities maintained a target price of 51,000 KRW and a 'Buy' investment rating on Novarex on the 13th, expecting an improvement in operating rate due to the full-scale operation of the Osong factory in the second half of this year and continued increased interest in health functional foods.

Novarex completed the Osong factory at the end of March this year and plans to operate it from the second half of the year. As a result, the existing production capacity is expected to expand from 250 billion KRW to over 450 to 500 billion KRW. The introduction of automated lines and a data-based smart factory is also expected to increase the operating rate.

Han Kyung-rae, an analyst at Daishin Securities, said, "As the operating rate increases, productivity improvement and a profit margin improvement of 1-2% or more are also possible," adding, "This year's operating profit margin is expected to improve by 0.5 percentage points from the previous year to 12.6%."

Overall interest in the health functional food sector is also expected. In fact, last year's top-selling items were eye health supplements lutein-zeaxanthin, joint supplement boswellia, and children's growth product Icltime, which are unrelated to COVID-19. An analyst explained, "The health functional food sector is expanding due to continued increased interest rather than temporary benefits from COVID-19," adding, "Customer orders in the first quarter of this year increased by more than 30% compared to the same period last year."

The external growth achieved last year is also positive. Last year's fourth-quarter sales were 55.1 billion KRW, up 22.9% from the same period last year, and operating profit was 7.2 billion KRW, up 60.3% from the same period last year. The company recorded external growth of more than 20-30% year-on-year each quarter last year.

An analyst predicted, "This year's sales are expected to increase by 26.2% year-on-year to 281.3 billion KRW, and operating profit is expected to increase by 31.7% to 35.6 billion KRW," adding, "High growth is expected to continue."

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