Korea Small Cap Gem #40: Meta Biomed (#1 Player Globally in Root Canal Filling Materials)

• Meta Biomed is the number one player in the world for root canal filling materials. It also produces other dental products, including bio-absorbable sutures and cosmetic medical products.

• Six major reasons why we like Meta Biomed include number one player for root canal filling materials, solid sales growth, strong export growth, improving ROE and operating margins, and valuations.

• We are introducing a new section (Major Factors of Business Operations and Valuations) for all our Korea Small Cap Gem Series from now on (see below).

Source: Meta Biomed

Key Investment Highlights of Meta Biomed

The following are the six major reasons why we have a Positive view of Meta Biomed:

• Number one player globally in root canal filling materials - Meta Biomed is the number one player in the world for root canal filling materials. It also produces other dental products, including bio-absorbable sutures.

• Solid sales growth - The company has generated solid growth in sales in the past several years. Its sales growth averaged 20.4% from 2021 to 2024.

• Strong export growth - Meta Biomed has generated an impressive export growth in the past five years. Exports as a percentage of total sales increased from 76.9% in 2021 to 89.5% in 2023 and 91.4% in 2024.

• Improving ROE - The company's ROE rose from 4.6% in 2022 to 14.7% in 2023, and 26.3% in 2024.

• Increasing operating margins - The company's operating margin also increased from 7.8% in 2022 to 12.8% in 2023 and 18.3% in 2024.

• Attractive valuations - The company has attractive valuations It is trading at P/E of 8.5x, P/B of 1.4x, and EV/EBITDA of 6.5x. It also has attractive financial ratios. Given the company's solid sales growth, improving EBITDA margins, and higher ROE, one could argue that the company should be trading at higher valuation multiples (P/B of 2x or more and EV/EBITDA of 10x or more).

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Major Factors of Business Operations and Valuation

We are introducing a new section (Major Factors of Business Operations and Valuations) for all our Korea Small Cap Gem Series from now on (see below). We are categorizing nine factors below (such as market share/business moat, sales growth, profit margins, ROE, etc). We will put them into either Satisfactory or Excellent categories.

The companies could have Poor rating for one or more of these categories. However, if they have such Poor rating for one or more of the categories, it is likely that we would not include the company as one of the Korea Small Cap Gems.

For Meta Biomed, it received Excellent rating for six of the nine categories but Satisfactory rating for three of them.