The authors are analysts of Shinhan Investment Corp. They can be reached at jhwon@shinhan.com and mingu.jeong@shinhan.com, respectively. -- Ed.
Leading dental implant company in Korea Disposable Dental Articulators
Dentium was established in June 2000 as a manufacturer and seller of dental implants and related instruments. Its shares are currently listed on the KOSPI. The company focuses mainly on the value segment of the dental implant market and also sells in-house developed digital dental equipment such as CBCT and CAD/CAM systems. Despite being a latecomer, Dentium has expanded its market share to the second largest in Korea and sixth largest in the world with clinical data spanning 18 years proving the solid performance of its dental implants. Going forward, we expect to see further expansion of market share as the company focuses on strengthening package (implants + equipment) sales through in-house production of digital dental equipment and expansion of product lineup.
Comprehensive lineup to boost profitability
Dentium has established a comprehensive lineup of digital dentistry solutions, expanding its business from implants to diagnosis and prosthetics using a wide range of digital dental equipment including CBCT, 3D printers, and CAD/CAM systems. The company’s dental implant and equipment package offerings targeting newly-opening clinics will likely help to expand its presence in the highly-competitive domestic market. Dentium is also expanding its foothold in the fast-growing market for dental implants in China by providing implants and equipment of higher quality vs. global peers in the value segment. Once the company's equipment is installed at clinics, the relatively higher margin and shorter demand cycle of dental implants should lead to further sales growth and margin improvement going forward.
Initiate coverage with BUY for a target price of KRW90,000
We initiate coverage of Dentium with BUY for a target price of KRW90,000, based on 2022F net profit of KRW58bn and a target PER of 17.8x. At a 2022F PER near 11x, Dentium shares are currently trading at lower valuations vs. domestic listed peers (Osstem Implant and DIO) despite higher sales contribution from China operations. We believe the company deserves attention at current share price levels, given: 1) plans to strengthen package sales through in-house production of digital dental equipment and expansion of product lineup; 2) cost savings and top-line growth expected from rising capacity utilization rates at China and Vietnam plants; and 3) potential to trade at a premium upon expansion into new businesses.
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