[Click eStock] 'Unbelievable Operating Profit' Seegene... "Growth Expected Due to COVID Variant Virus"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 19th that although the third wave of the COVID-19 pandemic shows signs of ending, the growth potential of diagnostic kit company Seegene is expected due to variant viruses.

Seegene recorded consolidated sales of 441.7 billion KRW in the fourth quarter of last year, an increase of 1208% compared to the previous year, and operating profit of 257.5 billion KRW, an increase of 4966%. However, this was about 18.5% below market expectations. It is analyzed that this was due to excessive spending on selling and administrative expenses, which increased by nearly 40 billion KRW compared to the quarterly average. Ordinary R&D expenses nearly doubled compared to the previous quarterly average to 10.5 billion KRW, and incentives increased sharply.

In the fourth quarter of last year, the KRW/USD exchange rate fell by about 6%, causing foreign exchange transaction losses for Seegene, whose export ratio is 95%, and donations of about 6.9 billion KRW resulted in a non-operating loss of approximately 14.3 billion KRW.

The third wave of COVID-19, which began in mid-October in the U.S., is gradually showing signs of ending. In the U.S., daily confirmed cases reached up to 300,000, but as of the 17th, the average daily confirmed cases decreased to about 77,700. This trend is also seen in Europe and South America, which are major export regions for Seegene. As a result, the export amount of diagnostic kits from Songpa-gu, Seoul, in January was 76.89 million USD (approximately 85.1 billion KRW), down about 28% from the previous month. The decline is expected to continue in February, and although Seegene’s sales in the first quarter are expected to increase significantly year-on-year due to the base effect, they are expected to decrease by about 15% compared to the previous quarter.

However, there is also the possibility of a fourth wave caused by COVID-19 variant viruses. The UK variant is estimated to have a 70% higher transmissibility and about a 30% higher fatality rate. Reports indicate that the South African variant reduces the effectiveness of existing treatments and vaccines. Because treatments and vaccines may vary depending on the variant, it is necessary to identify the type of variant, and diagnosis is required to measure the spread speed of the variant.

At the beginning of this month, Seegene developed a multiplex diagnostic kit that can detect infection of four new types of variant viruses from the UK, South Africa, Japan, and Brazil, as well as the existing COVID-19 virus, in a single test, allowing confirmation of variant virus infection within two hours.

They also developed a COVID-19 saliva diagnostic kit. Sun Min-jung, an analyst at Hana Financial Investment, said, "As COVID-19 testing is increasingly conducted widely and suspected cases can easily collect samples at home, Seegene, which is changing the paradigm of COVID-19 diagnostic kits, is expected to continue growing."

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