[Click eStock] "Dio, Q4 is Peak Season"

by Kong Byeongseon

Published 03 Nov.2021 08:33(KST)

D.O. Falls About 30% from All-Time High Recorded Last July
Yuanta Securities "Maintains D.O. Target Price at 72,000 Won"

[Asia Economy Reporter Gong Byung-sun] Although Dio's stock price has fallen about 30% from the high recorded in July this year, analysis suggests that it still holds investment appeal. This is because it is expected to enter the peak season from the fourth quarter of this year, with an operating profit margin reaching the 30% range, indicating profitability.

According to Yuanta Securities on the 3rd, as of the previous day, Dio's stock price closed at 33,700 KRW, up 1.89% (700 KRW) from the previous day. This price is about 38.7% lower than the highest price of 55,000 KRW recorded on July 19.

However, Yuanta Securities' analysis shows that Dio's performance is solid. Dio's third-quarter sales increased by 35.6% year-on-year to 39 billion KRW, and operating profit rose by 33.4% during the same period to 10 billion KRW. Domestic and overseas sales also showed balanced growth, increasing by 51% and 30% year-on-year, respectively. Although selling and administrative expenses increased by 47.4% year-on-year, this is interpreted as an investment to strengthen overseas sales in the mid to long term, such as hiring personnel due to the expansion of overseas subsidiaries.

It is expected to enter the peak season from the fourth quarter of this year. Additionally, external growth is anticipated to expand through contracts for edentulous solutions and digital implants signed in China in May and July. Yuanta Securities estimates Dio's fourth-quarter sales to increase by 22% year-on-year to 43 billion KRW, and operating profit to rise by 27.1% during the same period to 12.9 billion KRW. Furthermore, the operating profit margin is expected to rise again to the 30% range.

Researcher An Joo-won of Yuanta Securities stated, “We expect continued high growth in the future due to performance expansion following the recovery from the impact of COVID-19 and the expansion of digital dentistry,” adding, “The sale issue is still alive, so considering performance growth, it is a valid time for bottom-fishing purchases.”