Osstem Implant earnings outlook lifted by health care reform

2017.09.28 15:23:14 | 2017.09.28 15:33:47
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Osstem Implant Co., a South Korean company specializing in dental implants, is poised for higher growth thanks to the government’s recent health care reform that is expected to benefit local major dental implant brands including No. 1 Osstem Implant.

According to the Korea Exchange (KRX) on Wednesday, foreign investors have net bought 70 billion won ($61.1 million) worth of Osstem Implant shares so far since the second half of the year began. Foreign investors now make up 52.9 percent of all of its investors, jumping from 45.2 percent in late June.

Offshore investors’ buying spree comes as company prospects have brightened following the expanded health care coverage initiated by President Moon Jae-in. From July next year, individual implant costs will be cut to 360,000 won per unit from current 600,000 won, which is expected to drive up demand. Implant coverage for the elderly was also broadened in July 2016 as the age was lowered from 70 to 65.

“The extended coverage is likely to benefit the local major players the most,” said a company official, citing the current insurance policy that excludes non-Korean rivals from the coverage, making them less cost-competitive. He added that material costs are fixed so that people are likely to turn to well-known brands.

Korea’s implant market is dominated by Osstem Implant and four others, which together command 74 percent of total market share. Osstem Implant is at the lead with a 34 percent share, followed by Dentium at 14 percent, Dio Implant, NeoBiotech and MegaGen Implant. The market once populated with over 100 companies by the mid-2000s is now contested by about 40 after weaker players were weeded out.

Osstem Implant has shown stellar results over the years. Operating profit, which was 18.9 billion won in 2013, surged to 28.8 billion won in the following year and has been on a growing streak since, reaching 34.2 billion won last year. Korean financial data provider FnGuide forecast the company’s 2017 operating income to surge 27.4 percent on year to 43.7 billion won and sales to grow 18.5 percent to 408.3 billion won.

Performance is also strong across its overseas entities. Revenue from its Chinese operation is estimated at 60 billion won this year and 80 billion won the next. In North America, these figures are predicted to be 60 billion won and 75 billion won, respectively.

Shares of Osstem Implant closed Thursday up 1.19 percent at 67,900 won.

By Lee Yong-gun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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