[Click e-Stock] "Classys Expected to Scale Up Performance Next Year with Brazilian Subsidiary Acquisition"

Yuanta Securities analyzed on November 24 that Classys is expected to achieve a higher performance level next year due to the acquisition of its Brazilian subsidiary. The company maintained its "Buy" investment rating and target price of 74,000 won.

Lee Seungeun, a researcher at Yuanta Securities, stated, "The acquisition of Medsystems in Brazil is a key factor for upgrading revenue in 2026. Approximately 70 billion won, based on end-user prices rather than the previous supply price recognition, will be fully reflected in consolidated sales. Including distribution sales of other brands, the contribution of the Brazilian subsidiary to overall performance will increase significantly."

He added, "Although the operating margin appears low at around 12%, the company is currently streamlining non-core businesses and improving organizational efficiency. With a goal of recovering to 20% within two to three years, there is ample room for profitability improvement."

Classys recorded sales of 83 billion won in the third quarter, a 40% increase compared to the same period last year. He noted, "Cumulative sales for the third quarter reached 243.4 billion won, already surpassing last year's annual sales. If fourth quarter sales grow by 15% compared to the previous quarter, the company will be able to meet the lower end of its guidance."

He further emphasized, "In terms of profitability, the gross profit margin (GPM) declined slightly to 76.8% due to the increased proportion of equipment sales. However, this is a normal pattern seen during the early expansion phase of Ultrafomer MPT and Volnewmer. While Iruda equipment sales remain at around 16 billion won per quarter and are affecting the cost ratio, as productivity improves and new product manufacturing becomes more efficient, the GPM is expected to recover gradually."

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