Celltrion Soars as Institutions Take Interest

Stock Price Rally Supported by Earnings Expectations...Up 9.7% This Month

[Asia Economy Reporter Song Hwajeong] Celltrion continues its strong rally as institutional investors' buying momentum flows in. This is interpreted as the stock price strength being supported by expectations for this year's earnings.

As of 9:30 a.m. on the 17th, Celltrion was trading at 186,500 KRW, up 3.04% (5,500 KRW) from the previous day. It has maintained a strong trend for six consecutive days. After showing weakness at the beginning of the year, the stock price successfully rebounded this month. Based on the closing price on the 14th, Celltrion rose 9.7% since the beginning of this month.

Institutional buying is driving the stock price strength. Last week, institutions net purchased Celltrion worth 98.9 billion KRW, making it the second most bought stock after Samsung Electronics, and they have continued net buying for five consecutive days recently.

The stock price rebound of Celltrion is interpreted as reflecting positive earnings forecasts for this year. According to Shinhan Investment Corp., while the consensus for domestic companies' net profit this year was revised down by 0.8% compared to the previous week, the healthcare sector was revised up by 1.8%, showing the largest upward revision. Among healthcare companies, Celltrion was revised up by 3.7%. Researcher Kim Sangho of Shinhan Investment analyzed, "Celltrion's outlook reflects expectations for strong sales of Truxima in the U.S. in 2020 and profit growth due to the launch of Remsima SC in Europe."

On the 13th (local time), Celltrion announced that it completed the application for approval of Remsima SC to Health Canada. Health Canada recognizes the clinical data submitted by Celltrion to the European Medicines Agency (EMA) and will conduct the approval review over the next year. Remsima SC previously obtained marketing approval from the EMA in November last year.

Researcher Choi Seokwon of Hanwha Investment & Securities said, "Celltrion's sales and operating profit in the fourth quarter of last year are expected to increase by 72.2% and 233%, respectively, compared to the same period last year, reaching 417.6 billion KRW and 146.5 billion KRW." He added, "The sharp growth in operating profit is due to the base effect of one-time costs from price adjustments in the fourth quarter of 2018 and improvements in product mix." Researcher Choi added, "The earnings improvement trend is expected to continue every quarter this year. Until the third quarter of last year, fixed costs were burdened due to shutdowns and finishing work related to the expansion of Plant 1, but from this year, these one-time factors will no longer exist, and the scale is expected to grow by 21% due to the European launch of Remsima SC and the U.S. entry of oncology drugs Truxima and Herzuma."