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Following Peter Lynch’s teachings, While listening to the words of acquaintances and colleagues (especially women in their 20s and 30s), Recently, one company caught my attention. In this article, we will learn about Inmode.
In Mode uses minimally invasive technology to irradiate high frequency waves to the skin. It is said to be a treatment that promotes elastic skin, wrinkle improvement, and skin regeneration.
From an investor's perspective, there is no need to be absorbed in studying technology. This is my first impression of the Inmod treatment, which I experienced indirectly through acquaintances. Recovery from trauma appears to take approximately 3 to 5 days. The treatment area may also be red or slightly bruised, but it does not significantly interfere with daily life. The satisfaction of the practitioners was high and there seemed to be an immediate effect within 1 to 2 weeks.
All women who are interested in their skin already know, The reliability is so high that it is called a celebrity procedure. Moreover, the price varies from 100,000 to 200,000 won per session. Is it reasonable? The pain is relatively minimal and the procedure can be performed without anesthesia. Recovery is fast? There is no reason not to find out.
Check the trend
I checked the search trends to see if it was a trend only for some people around me. For confirmation, a website called Itemscout was used.
Keyword analysis related to skin treatment, January 2019 to July 2023, Itemscout
Enter keywords related to famous dermatological procedures. As a result of comparing data from 2019, when Inmode's search terms began to be captured, It has a higher search tendency than IPL or Fraxel, which are widely known to the general public. The number of searches was higher than that of the Shurink procedure, which I heard was popular until relatively recently.
However, these charts show that Inmode is generating most of the sales. Not only is it not an American chart, but there are various reasons for the increase in search frequency. There is no need to attach excessive meaning to the charts.
However, in Korea, the number one cosmetics market, interest in dermatological procedures is high compared to existing dermatological procedures. I think we can just go with the part that interest is still on the rise.
Is Inmode’s price reasonable?
InMode's stock price has suffered a significant decline starting in 2020. This is largely due to the collapse of the explosive growth until 2021. In fact, looking at the table below, a slowdown in growth is evident around 2021.
Table 1. 2018-2021 Inmode sales and net profit growth trend
Table 2. 2022-2025 Inmode sales and net profit growth trend (forecast, source: Stock Row)
Nevertheless, the fact that management pursues high levels of OPM and GPM; In addition to dermatology, new product launches based on high-frequency technology are expected to be launched in other fields as well. The fact that sales, which were concentrated in North America, continues to increase to each country, etc. It raises expectations that high-profit management will be able to continue in the future.
In fact, high margins are expected to continue in expected performance after 2022. A price of 20x PER, which is at least the market average, is considered appropriate.
What are your concerns about investing in Inmode?
Rather than being a concern, it may be a double-edged sword. The point is that cash assets are continuously accumulating. Management reportedly said that the cash would be used as M&A funds. I wonder if there is any other medical device company that is as profitable as Inmode.
Mirae Asset Securities, Global Company Analysis, Inmode_230215
You could say that there is no problem in buying another company with the remaining money as long as it is profitable. Paying excessive money compared to the actual value of the company being acquired, EPS is diluted by acquiring unprofitable companies. This is because there are many cases where it leads to a decline in stock prices.
In addition, the management's desire for M&A means that the growth and scalability of the main business is There is also a view that this is proof that it is lacking.
[[Article Link] Benzinga, Analyst Says M&A Could Be A Negative Catalyst For This Aesthetic Company]( https://finance.yahoo.com/news/analyst-says-m-could-negative-201458692.html )
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So far, we have learned about In Mode. Although there are some concerns, overall it seems to be a good company. It appears that the overvaluation caused by past high growth has been sufficiently resolved. Will high growth be sustainable in the future, and how will FCF be utilized? Will the expansion of overseas market share and entry into new fields be successful? We will also be watching future trends with interest.