20171129-三星证券-Kosdaq_Healthcare_-_Top-10_picks_53页_2mb

Sector Update Summary

Core Content

This document provides an update on the Kosdaq Healthcare sector, highlighting policy measures aimed at supporting the pharmaceutical, biotech, and medical device industries. It also lists the top-10 picks for Kosdaq Healthcare stocks based on fundamentals and share-price momentum.

The Korean government has implemented several initiatives, including expanding the National Health Insurance System, submitting a pharmaceutical industry support bill, and agreeing on a life sciences industry plan. Additionally, it has introduced measures to stimulate the Kosdaq exchange, such as encouraging pension funds to invest. These policies are expected to benefit the healthcare sector significantly, which currently represents 58.3% of the Kosdaq's market cap.

Main Points

• Government Policy Support: The government has taken steps to expand healthcare coverage, support the pharmaceutical industry, and boost the life sciences sector, which should lead to increased demand for healthcare-related products and services.

• Kosdaq Healthcare Performance:

  • Pharmaceutical firms have seen a 50.9% year-to-date (Ytd) return.
  • Medical device firms have experienced a 7.1% decline.
  • The ratio of gainers to losers in pharmaceuticals is 57.7%, while in medical devices it is 35%.

• Top-10 Kosdaq Healthcare Picks:

  • These are selected based on fundamental strength and share-price momentum, especially among oversold stocks with potential for upside.
  • The list includes: Huons, Dongkook Pharmaceutical, Dio, Value Added Technology, Nutribiotech, Macrogen, Anterogen, Access Bio, Hans Biomed, and ISU Abxis.

Key Information

• Dongkook Pharmaceutical (086450) is highlighted as one of the top picks due to:

  • A strong portfolio of OTC products such as Insadol, Madecassol, and Oramedy.
  • Functional cosmetics sales expected to reach KRW60b in 2017 and grow steadily in 2018.
  • Expansion of distribution channels to include department stores, duty-free shops, and online platforms.
  • A spun-off subsidiary, DK Life Science, which focuses on contrast agents and plans to go public in the future.
  • Attractive valuation and solid fundamentals, with expected sales growth and operating profit for 2017 and 2018.

• Market Data:

  • Market Cap: KRW582.4b
  • Forward P/E: 13.2
  • Forward P/B: 1.9
  • Ytd Return: 14.1%
  • November Return: 5.6%
  • Vs 52-Week High: (10.2)%

• Performance Highlights:

  • The company has steady sales and operating profit growth over the past decade.
  • Foreign ownership is at 24%, indicating some international interest.

Analyst Team

• Team Head: Brian Lee (Pharm/Biotech)
• Analysts:
  • SunYoung Yoon (Pharm/Biotech)
  • Kevin Kim (Medical Devices/Medical Aesthetics)
• Research Associate:
  • Wonyong Park

Additional Insights

• The Kosdaq Healthcare sector is well positioned to benefit from government initiatives.
• Valuation and momentum are key criteria for selecting top stocks.
• Dongkook Pharmaceutical is expected to benefit from new business ventures and subsidiary growth.
• The functional cosmetics segment is a new growth area for the company, showing potential for market expansion.

Summary Table

Conclusion

The healthcare sector, particularly pharmaceutical and biotech companies, is expected to benefit from government support and a renewed focus on the Kosdaq exchange. Dongkook Pharmaceutical stands out as a strong candidate due to its solid fundamentals, valuable OTC products, and growth in the functional cosmetics market. The top-10 list reflects a combination of momentum and fundamental strength, indicating potential for upside in the coming period.