[Click eStock] JV M, Investment Opinion 'Buy' Initiated... Unrivaled Technological Competitiveness

[Asia Economy Reporter Lee Seon-ae] IBK Investment & Securities initiated a 'Buy' rating on JV M on the 4th. The target price was set at 22,000 KRW. This was calculated by applying a 12-month forward earnings per share (EPS) of 1,189 KRW and a domestic medical device sector average price-to-earnings ratio (PER) of 18 times.

JV M started its business in 1977 with manual drug packaging machines and currently develops and supplies automated devices for hospitals and pharmacies, such as ATDPS (drug dispensing) and INTIPharm (drug management). As of the first half of 2021, 58.7% of sales were generated domestically and 41.3% through exports, showing a balanced sales structure without bias toward either the domestic or overseas markets.

Main overseas sales occur in North America and Europe. In the North American market, benefits are expected from expanding market share in the LTC (Long Term Care) sector and the growth of online pharmacy services. Meanwhile, in Europe, demand for equipment replacement in factory-type dispensing pharmacies and profit normalization due to cost efficiency from restructuring sales organizations are currently being observed.

JV M holds high technological competitiveness and a unique market position not only domestically but also in the global market. If continuous expansion in scale is demonstrated in Europe and North America, a rapid market revaluation is expected.

Geonjae Lee, a researcher at IBK Investment & Securities, explained, "Although only one-off reports were published on the company over the past three years, we are issuing an investment opinion due to expected benefits from export performance growth in the second half and the expansion of INTIPharm's domestic penetration."

Meanwhile, after the largest shareholder changed to Hanmi Science in 2016, the market expected synergy between the parent company and JV M, but no clear synergy effect has appeared over the past five years. However, tracking changes over five years shows that the European subsidiary, which had been continuously running deficits, has turned profitable, and although one-off, transactions with named clients have occurred in the North American market.

Ultimately, while the pace is regrettable, it is judged to be progressing steadily like a wise ox. Additionally, JV M holds such a high market dominance in the domestic ATDPS market that there are virtually no competitors, and it is expanding overseas market entry based on this foundation. It is expected to attract strong market interest when overseas sales growth begins in earnest.

The domestic INTIPharm market is also expected to grow moderately. Since COVID-19, the need for effective medical personnel management in domestic medical facilities has been highlighted, and installations of INTIPharm, manufactured and sold by the company, are expected to increase in tertiary hospitals. Since most domestic medical facilities allocate budgets in the second half of the year, the fourth quarter, when export performance and INTIPharm results combine, is expected to show the highest performance of the year.

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