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Seeking to become a total solutions provider

1Q24 preview: Revenue and OP to meet consensus

For 1Q24, we expect Classys to report revenue of W47.8bn (+23% YoY) and operating profit of W23.7bn (+19% YoY; OP margin of 49.6%), with both figures meeting the consensus.

Reiterate Buy and TP of W45,000

We expect the company to deliver solid, in-line results for 1Q24. Based on Korea Customs Service data, exports appear to be driving top-line growth. Domestically, increased demand for Shurink-Volnewmer package deals is fueling growth.

In 2024, we expect Volnewmer to expand overseas, becoming a key growth driver (alongside the cash cow Shurink Universe). Volnewmer has gained sales licenses in many countries, including Japan, Hong Kong, Thailand, Indonesia, and Brazil. Considering preferences for aesthetic procedures in each region, we expect Volnewmer to gain more popularity in Asia than in other regions. Meanwhile, we forecast Volnewmer to enter the US market in 2025, earlier than originally planned. For 2024, we look for revenue of W222bn (+23% YoY) and operating profit of W111.6bn (+25% YoY; OP margin of 50.3%).

Classys shares are currently trading at a 12-month forward P/E of 23x, a premium to the global peer average (16x) and the stock’s three-year average (19x). Notably, amid a series of reports about private equity firms attempting to acquire companies specializing in energy-based aesthetic devices, Classys has the advantage of being immune to such attempts (as it was already acquired by Bain Capital in 2022).

On Apr. 18, Classys completed the acquisition of a 17.8% stake in Ilooda (previously held by Ilooda’s largest shareholder, Kim Yong-han). Massive synergies are expected from the deal, as there is no significant overlap in the two companies’ key markets and product portfolios. Ilooda’s earnings will be recognized as equity-method income from 2Q24. Classys holds call options for Mr. Kim’s remaining stake until Mar. 2025.