20171115-三星证券-Dental_implant_players_3Q_review_11页_488kb

Sector Update Summary

Core Content Overview

This document provides a sector update on three Korean dental implant companies: Dentium, Dio, and Osstem Implant, with a focus on their 3Q 2017 performance, forecast revisions, and valuation analysis. The report highlights their financial results, growth trends, and analyst ratings.

Key Companies and Their Performance

Dentium (145720 KS, KRW65,500)

• Target Price: KRW79,000 (up 20.6%)
• 3Q17 Results:
  • Consolidated sales: KRW38.8b (up 24.6% y-y)
  • Operating profit: KRW10.5b (up 1% y-y)
  • Net profit: KRW9.6b (up 35.8% y-y)
• Performance Highlights:
  • Overseas sales rose 47.3% y-y to KRW26.9b, with the export portion increasing to 69.2%.
  • The company's performance is robust, especially in overseas markets.
• Rating: OVERWEIGHT
• Valuation:
  • Operating value: KRW876.8b
  • 2018E net profit: KRW37.7b
  • P/E: 23.3x
  • Note: 15% discount to global dental device players

Dio (039840 KS, KRW36,950)

• Target Price: KRW45,000 (up 21.8%)
• 3Q17 Results:
  • Consolidated sales: KRW24.7b (up 14.8% y-y)
  • Operating profit: KRW7.2b (up 1.2% y-y)
  • Net profit: KRW5.9b (down 32% y-y)
• Performance Highlights:
  • Overseas sales increased 51.9% y-y to KRW14.2b.
  • Asia ex-China sales rose 86.5% y-y due to a JV in Iran.
  • Expected growth in 2018 due to normalization of JVs and hiring effects.
• Rating: OVERWEIGHT
• Valuation:
  • Operating value: KRW682.5b
  • 2018E net profit: KRW25.4b
  • P/E: 26.9x
  • Note: Global dental device players (26.9x 2018E P/E)

Osstem Implant (048260 KS, KRW74,900)

• Target Price: KRW81,000 (down 8.1%)
• 3Q17 Results:
  • Consolidated sales: KRW99.6b (up 13.8% y-y)
  • Operating profit: KRW4.4b (down 62.4% y-y)
  • Net profit: KRW5.3b (up 82.3% y-y)
• Performance Highlights:
  • Domestic sales declined 13.8% y-y to KRW10.5b.
  • Overseas sales increased 29.8% y-y to KRW54.3b.
  • The company missed consensus on key metrics, leading to a downgrade.
• Rating: HOLD
• Valuation:
  • Operating value: KRW1,160.6b
  • 2018E net profit: KRW36.7b
  • P/E: 31.6x
  • Note: 20% premium to global dental device players

Main Views and Key Information

Dentium

• Maintained as the top pick in the medical device sector due to solid earnings growth and valuation merit.
• Strong overseas performance and export growth are key drivers.
• Revised full-year forecasts slightly downward, but target price increased due to enhanced earnings visibility and global re-rating.

Dio

• Results in line with expectations, with strong overseas growth.
• Expected to see significant sales growth in 2018 due to removal of base effects and JV normalization.
• Target price raised due to export momentum and global sector re-rating.

Osstem Implant

• Missed consensus on operating profit, leading to a downgrade to HOLD.
• Despite strong top-line growth, SG&A costs remain a challenge.
• Target price trimmed due to weakened short-term momentum.

Summary Table

Conclusion

The dental implant sector in Korea is showing varied performance. Dentium and Dio are highlighted for their strong overseas growth and earnings visibility, leading to OVERWEIGHT ratings. Osstem Implant faces challenges with SG&A costs and missed earnings expectations, resulting in a HOLD rating. The sector is experiencing a re-rating, with Dentium and Dio benefiting from global trends, while Osstem Implant needs to address cost management to improve its performance.