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Implant price decline in China finally coming to an end

4Q23 review: Record quarterly results, with both revenue and OP beating consensus

For 4Q23, Dentium reported above-consensus revenue and operating profit. Revenue climbed 33% YoY, driven by sharp growth in exports to Russia, and operating profit jumped 32% YoY on leverage effects resulting from top-line growth.

Trading at a 12-month forward P/E of 12x, a discount to global peers (18x) and the five-year average (16x)

Although dental implant sales prices in China are estimated to have fallen more than 20% since the volume-based procurement (VBP) program was implemented, we believe prices have begun to stabilize this year. Furthermore, we believe volume growth will continue to outweigh lower pricing, as the VBP program should help expand China’s dental implant market over the long term. We are also encouraged by solid domestic market conditions and stabilizing exports to Russia. For 2024, we expect Dentium to post revenue of W458.7bn (+17% YoY) and operating profit of W152bn (+15% YoY; OP margin of 33.1%), with additional upside possible if digital dentistry demand recovers and China implements further stimulus measures. Based on shares outstanding, the stock is trading at a 12-month forward P/E of below 10x.