[Click eStock] "Ray, Expected to Become a Comprehensive Dental Solution Company through China JV"

[Asia Economy Reporter Hyunseok Yoo] Shinhan Financial Investment analyzed on the 17th that Ray is expected to actively expand its business as a comprehensive dental solution company through the establishment of a JV with China International Capital Corporation (CICC) in 2022. The investment opinion 'Buy' and the target stock price of 46,200 KRW were maintained.

On the previous day, the 16th, Ray disclosed a decision to acquire stocks and equity securities of another corporation. Through the investment, it contributed 28.5 billion KRW to Ray China (JV). The final shareholding of Ray and CICC in Ray China is expected to be 53.7% and 46.3%, respectively.

Shinhan Financial Investment expects Ray China to achieve vertical integration through entry into corporate network dental hospitals, securing captive customers, and stable sales growth.

Jung Mingu, a researcher at Shinhan Financial Investment, said, "Existing dental hospitals in China have chronic issues such as a shortage of skilled doctors, but Ray can efficiently train skilled doctors by collaborating with Korean network hospitals and integrating our digital treatment solutions." He added, "Ray China is expected to rapidly increase the number of managed hospitals through differentiated operations within China."

He continued, "The increased number of hospitals is expected to create a virtuous cycle effect by connecting to captive sales channels."

Profitability is also expected to improve after the establishment of Ray China. He explained, "Ray plans to actively expand into high-margin products such as implants and clear aligners after the JV establishment, and profitability improvement is expected accordingly. Dental materials have a gross profit margin about 20-30% higher than equipment due to product characteristics."

He emphasized, "Ray is expected to smoothly sell materials not only to hospitals managed by Ray China in the future but also to existing domestic and overseas customer hospitals. Starting from the second half of 2022, when the China factory is expected to be completed, products such as implants and clear aligners are expected to be produced and contribute to sales in earnest."

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