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Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.

Keeping its promise to give men better alternatives to stem hair loss and restore vitality, DS Healthcare Group, Inc. (DSKX) announced a new tablet for baldness that will give Propecia, the popular pill for thinning hair that inhibits a form of testosterone, a run for its money.

The product will launch in Mexico, in the first quarter of 2014, then expand into international markets where DS Healthcare already has distribution muscle. A complement will be created among their existing topical treatments that are known for making hair grow thicker and stronger, using the same kinds of peptide and antioxidant ingredients that make Revita and Spectral.DNC so effective.

Propecia, originally Proscar made by Merck & Co. (MRK) for prostate cancer, is a bad drug. Men take it to combat baldness, equated, in their minds, with aging but ironically, it can cause impotence. Imagine men in their late twenties or early thirties with thinning patches of scalp hair or receding hairlines that reach for the nearest pill their doctors recommend - only to render them with lessened libidos and limp equipment. This is not the worst of Propecia's side effects; others include swelling of breast tissue and weight gain. Worse, Propecia has gone generic, and now only generates about $140 million in revenue per year.

A head of healthy hair denotes confidence which leads to success and no company knows this better than DS Healthcare. To mark their place in history, the company recently filed a composition and method patent for a new hair loss treatment. The only other patents of this type are for Rogaine, originally sold by Johnson & Johnson (JNJ) and the aforementioned Proscar with its own set of problems. Rogaine is marginally effective; a greasy product eschewed by most men.

DS Healthcare is expanding like a visionary, from North America to the south, bringing its Brazilian distribution from retail pharmacy to online. Other beauty sellers, such as Sephora, have attempted international presence with common-place blushes and mascara plying the Mexico and Brazilian markets but do not have the special products that DS Healthcare has.

DS Healthcare will soon enter China. The country's big population and growing middle class with more women in the workforce is calling for beauty, equated with success, where personal care product sales was estimated at $24 billion in 2010, magnitudes higher than 10 years ago. Demand is steady. Big players are involved: Estee Lauder (EL) recently opened a new research and development center twice the size of its original facility designed to create products for local customers.

Estee's worldwide competitor, L'Oreal SA (OTCPK:LRLCY), is selling almost $2 billion in beauty products in China, growth of almost 18% since 2011. An interesting side note and exemplary of the beauty boom in China is the sheer number of pageants held each year- 300, almost one a day - in addition to the annual Beauty Expo in Shanghai, a trade platform for international cosmetics with over 1,600 exhibitors from 22 countries.

Most important, grooming products among younger Chinese men is a growth market, recording double-digit gains since last year. China's Wuhan Morning News recently featured an article on why baldness is a crisis with men in their 20s calling it a "modern disease" related to the stress of population growth and competition for employment. Medical attention is frequently sought.

DS Healthcare's expansion, with Brazil, Mexico and now China in its reach, makes it truly a multi-national personal products firm, and revenue growth with new product promise should easily follow. In light of this, I cast earnings projections for the company using a conservative revenue trend analysis that yields $28.7 million in 2015 with positive net earnings of $0.35 per share that year. Employing a discounted cash flow model based on a 12% discount rate and 30x forward P/E multiple (from comparable companies and DS Healthcare's own revenue growth potential), I arrived at a target price of $7.50 in 12 months.

Recent analysis done by a Wall Street firm priced DS Healthcare at a lower figure using a series of difficult metrics that would tax an astronaut and do not address the company's potential. A note to investors here - this company has been operating on somewhat slim cash balances and the need to raise funds is ever-present. Should this occur in the near future, its pristine balance sheet with negligible long-term debt of slightly over $39,000 (a debt-to-equity ratio of a tiny 1.2%) would be shored up considerably, attracting a better valuation from those who recognize a solid growth opportunity in the large and perpetual beauty arena.

Risks specific to this company are managing growth and understanding foreign markets. To accomplish this, DS Healthcare has on hand a staff well-versed in international relations with experience selling overseas, as evidenced by its presence in 15 markets outside of the US with sales volume that has gained almost every quarter. Growing pains are always a challenge, as with any new competitor in the beauty market, although as time goes on these forward-thinking innovators are quickly becoming seasoned marketing veterans.

This new initiative in hair restoration should boost DS Healthcare's undervalued stock, currently selling at an undeserved $25 million market capitalization. My valuation puts them at over $100 million, ridiculously low compared to competitors like Coty Inc. (COTY), makers of second-rate shower gels and deodorants whose stock sells at nearly $6 billion. I first fell in love with DS Healthcare's flagship products Revita and Spectral DNC two years ago, and still marvel at their quality that has improved the texture and fullness of my hair. The products work.

Source: Product Pipeline That Rivals Rogaine And Propecia To Propel DS Healthcare's Valuation

Additional disclosure: I have been given products (Shampoo and hair treatment samples) by the company after I wrote a previous article. I have also purchased products at local retail store.