Why Are There So Many Foreigners at Dermatology Clinics? ... Beneficiaries of the K-Medical Tourism Boom [Weekend Money]

Daol: "PharmaResearch's Rapid Growth Driven by Rejuran"

Korea's medical tourism, centered around dermatology, is thriving and is expected to drive continued growth for PharmaResearch. The securities industry forecasts that shares of PharmaResearch could rise by up to 77.3%.

Park Jonghyun, a researcher at Daol Investment & Securities, raised the target price for PharmaResearch from 530,000 won to 540,000 won, while maintaining a 'Buy' rating. This indicates a potential upside of 77.3% compared to the closing price of 304,500 won as of June 24. Park explained the reason for the upward revision, stating, "Investment in branding and marketing for Rejuran is leading to growth in the cosmetics segment, and sales are expected to exceed market expectations."

Expectations for PharmaResearch’s growth have been fueled by 'medical tourism.' Park noted, "Spending on dermatology in medical tourism reached 140.8 billion won and 145.2 billion won in April and May respectively, marking year-on-year growth of 63% and 86% and setting record highs." He added, "The upward trend in dermatology spending is likely to continue due to inbound tourist effects and the domestic 'wealth effect.'"

Accordingly, Daol Investment & Securities estimates that PharmaResearch’s second-quarter revenue will grow 25% year-on-year to 175.8 billion won, while operating profit will increase 21% to 67.5 billion won. The revenue is projected to exceed market expectations, while operating profit is expected to be in line with forecasts.

Domestic cosmetics sales are projected to reach 18 billion won, up 60% year-on-year. Park added, "Growth in B2C duty-free sales and sales through H&B channels driven by inbound tourist inflow will contribute to overall performance."

Export growth is expected to be even more significant, with exports forecast to rise 105% year-on-year to 40 billion won. Park commented, "Sales growth driven by rising sales through Southeast Asian and Eastern European channels, as well as store expansion and channel growth in the United States and China via Sephora, will contribute to overall performance."

However, as the proportion of cosmetics increases in the sales mix, the gross profit margin (GPM) is expected to decline by 0.6 percentage points year-on-year to 75.6%. Park analyzed, "While overall marketing efforts may lead to a decline in the operating profit margin (OPM), gradual improvement in OPM is expected due to operational leverage."

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