"Hugel's Record-Breaking Performance Driven by Expanded Exports to China and Europe"

Market expectations are rising for Hugel following its announcement of results that far exceeded projections. Analysts predict that the company's strong performance will continue in the second half of the year, bolstered by export growth and reduced selling and administrative expenses.

On August 7, Hugel announced that it had achieved its highest-ever quarterly results, with Q2 sales of KRW 95.4 billion (USD 75.1 million) and an operating profit of KRW 42.4 billion (USD 33.4 million). These figures represent increases of 17% and 51.6%, respectively, compared to the same period last year, and significantly surpass the market’s expectations (sales of KRW 90.9 billion and operating profit of KRW 32.7 billion).

Dalmi Lee, an analyst at BNK Investment & Securities, attributed Hugel's strong performance to its expanded exports. She noted, "The demand for botulinum toxin products has increased in China and Europe, leading to a 62% growth in overseas toxin sales year-on-year. Additionally, overseas filler sales grew by 23.1%, driven by increased demand in China and non-mainstream countries, contributing to the company's overall growth."

Lee further predicted that Hugel would continue to focus on expanding its exports in the second half. The key factor will be the entry of its toxin product, Botulax (export name Letybo), into the U.S. market. Hugel plans to expand Letybo's sales channels in the U.S. through its partner, Croma-Pharma. The goal is to secure a 10% share of the U.S. toxin market, which is valued at approximately KRW 3.25 trillion (USD 2.56 billion), within four years.

Lee added, "The initial shipments are expected to begin later this year, with U.S. toxin sales set to significantly boost Hugel's profits starting next year." Consequently, she raised her forecasts for Hugel's operating profit by 6.3% for this year and 5% for next year.

Jung-hyun Kim, an analyst at Kyobo Securities, emphasized that Hugel succeeded in expanding its operating profit by reducing selling and administrative expenses. Notably, Hugel is engaged in a legal dispute with Medytox over the alleged theft of botulinum toxin strains. The reduction in legal costs is a significant factor in this success.

Kim stated, "Hugel partially removed the uncertainty surrounding the botulinum toxin strains by winning a preliminary decision in its favor from the U.S. International Trade Commission (ITC). Previously, legal costs related to the lawsuit were recognized at KRW 3.5 billion to KRW 4 billion (USD 2.8 million to USD 3.1 million) per quarter, but in Q2, these costs were reduced to under KRW 2 billion (USD 1.6 million)."

Based on this analysis, Kyobo Securities maintained its buy rating for Hugel and raised its target price to KRW 300,000 (USD 236.1).