[Click eStock] "IL Science, Profit Growth Accelerates from Q2"

[Asia Economy Reporter Hyunseok Yoo] Hanyang Securities analyzed on the 21st that IL Science will see profit growth start in earnest from the second quarter. No investment opinion or target price was provided.

IL Science recorded sales of 6.1 billion KRW and an operating loss of 700 million KRW in the first quarter. Although sales increased by 270.7% compared to the same period last year, the operating loss continued. Yongho Kim, a researcher at Hanyang Securities, said, "Despite increased marketing expenses due to the launch of new products in the beauty care sector, operating loss was reduced thanks to sales growth led by the B2G business."

He expected performance improvement to be possible from the second quarter. He explained, "B2G orders delayed last year due to COVID-19 resumed in the first quarter, and related sales are estimated to have started being recognized from the second quarter. Therefore, we expect a turnaround with operating profit recorded in the second quarter and entry into a profit growth trajectory from the second half."

In particular, he anticipated continued performance growth in the second half. He emphasized, "Profit growth in the second half is attributed to the visibility of large B2B orders, continued B2G orders such as from the Korea Expressway Corporation, and expansion of the beauty care business including Polinique. Among B2G businesses, tunnel lighting projects for the Korea Expressway Corporation are expected to drive medium- to long-term profit growth, as these tunnel lighting contracts are conducted through negotiated contracts, which are relatively more profitable than competitive bidding."

Additionally, Kim explained that steady attention is needed for the beauty care business. He said, "We also expect the scalp care device ‘Polinique’ to make significant progress, with plans for overseas expansion in the second half and smooth distribution network secured through collaboration with major domestic pharmaceutical companies. We plan to gradually expand sales channels starting with confirmed demand in the Middle East and Europe."

He added, "The performance of ‘Ahez,’ a scalp and hair care product specialist company incorporated as a consolidated subsidiary in July last year, will be fully reflected from this year. The beauty care business will now make a full contribution to the company’s overall performance, as Polinique’s sales channels expand domestically through large marts, home shopping, and online platforms as well as overseas."

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