[Click eStock] "Sijeon Still Has Opportunities, Surprise 4Q Earnings Expected Last Year"

Operating Profit of 205.7 Billion KRW... Expected to Exceed Market Forecast by 34%
Increased Demand for Regular Testing Due to With-Corona... Optimism for Platform Business Also Present

SiGene researchers are analyzing and testing for the novel coronavirus infection (COVID-19) on the afternoon of the 6th at the SiGene Medical Foundation Molecular Diagnostic Center in Seongdong-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Minwoo Lee] Seegene is expected to post surprise earnings in the fourth quarter of last year that exceed market expectations. This is attributed to increased demand for diagnostic kits due to the resurgence of COVID-19. With the easing of social distancing measures, there is a growing demand for regular testing, leading to expectations that Seegene will also benefit from the 'with COVID' policy.

On the 24th, Shinhan Financial Investment maintained a 'Buy' rating on Seegene and raised the target price by 6.3% to 85,000 KRW, citing these factors. The previous trading day's closing price was 60,200 KRW.

Seegene's consolidated earnings for the fourth quarter of last year are estimated at 412.4 billion KRW in sales and 205.7 billion KRW in operating profit. Although these figures represent decreases of 6.6% and 20.1% respectively compared to the same period last year, they are expected to surpass market consensus by 21% and 34%. This is attributed to increased demand for diagnostic kits as the Delta and Omicron variants of COVID-19 spread simultaneously.

For this year, sales are estimated at 1.1286 trillion KRW and operating profit at 497.8 billion KRW. These figures represent decreases of 17.8% in sales and 26.0% in operating profit compared to last year's estimates. Won Jaehee, a researcher at Shinhan Financial Investment, explained, "Despite the COVID-19 vaccination completion rate exceeding 70% in Europe, one of the main sales markets, the number of confirmed cases is at an all-time high." He added, "As this trend is expected to continue for some time, demand for COVID-19 diagnostic kits will persist, limiting the extent of sales decline."

Seegene is also expected to benefit from the 'with COVID' policy. With the easing of social distancing, the increase in confirmed cases is anticipated to raise the demand for regular testing at public facilities such as schools, workplaces, and airports. Researcher Won said, "Seegene plans to launch a product this month that reduces testing time to within one hour." He added, "This will create synergy with mobile on-site testing labs and automated testing equipment, responding to the expanding demand for diagnostic kits and serving as a solution for the 'with COVID' era."

Future growth strategies are also highlighted. Since Seegene is preparing to establish a molecular diagnostic platform through the automated reagent development process (SGGDS), the current valuation is considered undervalued. Researcher Won analyzed, "With the expected entry into the U.S. market through Bio-Rad next year and potential mergers and acquisitions (M&A), the investment appeal remains strong."

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