Essential Equipment in the Obesity Drug Era... InBody Scales Up [Click eStock]

Third-quarter operating profit rises 47.8% year over year
Demand for body composition monitoring grows as GLP-1 prescriptions expand

Securities analysts say InBody will continue to achieve structural growth in scale, driven by demand for body composition monitoring.

According to SangSangin Securities on October 14, analyst Ha Taegi said the previous day that InBody was "a first mover with unrivaled body composition analysis capabilities and an essential infrastructure company in the era of obesity drugs." He maintained his Buy rating and target price of KRW 85,000.

Obesity drug prescriptions expand...equipment establishes itself as essential

SangSangin Securities estimated that InBody's consolidated revenue for the third quarter of this year would rise 22.2% year over year to KRW 73.1 billion, while operating profit would increase 47.8% to KRW 14.5 billion. Exports of body composition analyzers, which account for about 70% of revenue, are believed to have driven the improvement, growing 27.0% to KRW 47.9 billion.

InBody continues to post strong growth in Mexico and Asian markets, as well as in the United States and Europe, which together account for half of its total revenue. Exports in the consumer segment, which sells home-use body composition analyzers, are also expected to reach KRW 7.6 billion, up 40.0% year over year, as more people with obesity seek to measure their body composition themselves.

"The need to measure muscle mass has risen significantly as prescriptions for GLP-1 (glucagon-like peptide-1) drugs have increased recently," Ha said. "Demand for body composition monitoring is also growing among global pharmaceutical companies that develop and sell obesity drugs." Wegovy and Mounjaro, which currently account for the bulk of South Korea's obesity drug market, are also GLP-1 obesity drugs.

InBody currently has 13 overseas sales subsidiaries and exports its products to 110 countries around the world. Exports accounted for 87.3% of revenue in the first half of this year, but body composition analyzers remain at an early stage of adoption in developed overseas markets. As prescriptions for obesity drugs increase, equipment adoption is expected to spread rapidly not only in hospitals, clinics, and health screening centers, but also in fitness centers and sports facilities.

Stock price correction presents a buying opportunity...valuation appeal comes to the fore

Analysts say concerns that the recent decline in the dollar-won exchange rate will dampen profitability are limited. "The lower exchange rate has put upward pressure on the cost ratio, but the impact can be sufficiently offset by increased sales volume," Ha said. "Sales of premium products are rising as new customers, including global obesity clinics and pharmaceutical companies, increase, helping the company maintain solid profitability."

He added, "After a brief pause in the third quarter, revenue growth compared with the previous quarter is expected to pick up again from the fourth quarter, a seasonally strong period." He forecast that fourth-quarter revenue and operating profit would reach KRW 75.1 billion and KRW 11.6 billion, respectively, continuing the growth trend.

InBody shares reached a peak in the KRW 73,000 range in early August, then fell to around KRW 51,000 amid the weaker exchange rate and increased stock market volatility. However, the price-to-earnings ratio (PER) remains at about 13 times, compared with the company's earnings growth potential, making the stock attractive on valuation, analysts say.

"InBody has established an unrivaled premium brand in global export markets and is expected to sustain annual revenue growth in the mid-to-high teens," Ha said. "Given its stable earnings growth, the current share price is significantly undervalued relative to the company's fundamentals, and the stock will regain strong upward momentum as its third-quarter results are confirmed."

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