[Click eStock] "Seegene Invests 300 Billion KRW in Post-COVID Food Business"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 23rd that it raised the target price for Seegene to 260,000 KRW, stating that the increase in labor costs and research and development expenses is not simply a cost increase but an investment in future growth engines to secure sustainable growth.

Sun Min-jung, a researcher at Hana Financial Investment, said, "Seegene is continuously strengthening its workforce with M&A experts and technology development specialists," adding, "Market concerns about Seegene revolve around whether it can achieve sustainable growth after the end of COVID-19. Seegene is continuing to invest in various ways to secure technologies that can become future growth engines based on its abundant cash."

Seegene's first-quarter sales are estimated at 352.2 billion KRW, a 331% increase year-on-year on a consolidated basis, and operating profit is estimated at 188.4 billion KRW, a 374% increase year-on-year (OPM 53.5%). Monthly customs clearance data from the Korea Customs Service allows estimation of Seegene's sales scale, but since this data can cause noise leading to increased stock price volatility, Seegene announces provisional monthly sales figures.

The provisional sales figures announced by Seegene were 127 billion KRW in January, 96.6 billion KRW in February, and 128.5 billion KRW in March, totaling 352.1 billion KRW for the first quarter. Since last fall, as the global COVID-19 pandemic began, Seegene's diagnostic kit export amount peaked in the fourth quarter, but as the number of confirmed cases began to decrease in January, sales dropped by 27% and 39% month-on-month in January and February, respectively.

However, confirmed cases began to rise again in the Southern Hemisphere, centered on Brazil, in March, and the export amount of diagnostic kits from Songpa-gu increased by 34% month-on-month in March. Due to slower-than-expected vaccination rates and the emergence of variant viruses, this upward trend is expected to continue into the second quarter. In fact, on the 15th, Seegene signed a contract with the Italian government to supply COVID-19 diagnostic kits worth approximately 120 billion KRW.

Last year, Seegene experienced rapid growth within a year by exporting large quantities of diagnostic kits due to the COVID-19 pandemic. In terms of operating profit, it ranks second after Celltrion, and with a market capitalization of 55 trillion KRW, it has achieved a scale about twice as large as Samsung Biologics, which is the number one in the pharmaceutical and bio sector.

Seegene is focusing on strengthening its workforce and research and development expenses to invest its cash and cash equivalents amounting to 300 billion KRW this year into future growth engines, and labor costs and R&D expenses are expected to increase by 41% and 100%, respectively, compared to the previous year. As a result, the operating profit margin is expected to decrease by about 9.4 percentage points year-on-year.

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