[Click eStock] Celltrion 3Q Operating Profit 178.2 Billion KRW... Expected 73% Increase YoY

Expansion of Remsima SC into Europe Planned... "Will Continue Growth Trend"
Year-End Interim Report on COVID-19 Treatment Development Also Key

[Asia Economy Reporter Minwoo Lee] Celltrion is expected to post generally solid third-quarter earnings. The stock price is anticipated to fluctuate depending on the interim results announcement of the novel coronavirus disease (COVID-19) treatment development scheduled within the year.

On the 20th, Kiwoom Securities forecast that Celltrion will achieve third-quarter sales of 456.8 billion KRW and operating profit of 178.2 billion KRW this year. Compared to the same period last year, sales are expected to increase by 58% and operating profit by 73%. Sales are in line with market consensus, but operating profit is expected to fall short by about 5%. Huh Hyemin, a researcher at Kiwoom Securities, analyzed, "The proportion of the supply contract amount for Remsima IV, which has a relatively low unit price, is estimated to have increased from 26% in the previous quarter to 29% in the third quarter," adding, "As the clinical trials for the COVID-19 treatment accelerate, related clinical costs are expected to expand."

Kiwoom Securities lowered the target price for Celltrion by about 7.9% to 350,000 KRW. This reflects the current status of COVID-19 treatment development and a downward revision of the Remsima SC estimates. Researcher Huh explained, "Since last year, the cumulative sales of Remsima SC to Celltrion Healthcare amount to approximately 500 billion KRW, and the cumulative sales of Remsima SC sold by Celltrion Healthcare in the first half of the year are 15.5 billion KRW, indicating that there appears to be sufficient safety stock at present," adding, "However, considering the need to prepare for large-scale production of the COVID-19 treatment and the expected increase in demand for Remsima SC next year, it is anticipated that sufficient safety stock should be held in advance." The expansion of launch countries due to the listing of Remsima SC prices by country in Europe is expected to begin in earnest next year, which will also confirm the market entry speed of Remsima SC.

Although the target price was lowered, the investment opinion was maintained as 'Buy.' This is based on the expectation of an interim announcement of clinical results for the COVID-19 treatment development within the year and the judgment that growth will continue. Researcher Huh stated, "Depending on the year-end announcement of the phase 2/3 part 1 data for the COVID-19 treatment, an application for emergency use approval in Korea is expected," adding, "Preparations are underway for initial production volumes for large-scale commercial production of the treatment under development, and the initiation of phase 2/3 clinical trials reflects confidence in the product, which is positive." The suspension of Lilly's phase 3 clinical trial for its COVID-19 antibody treatment was also cited as a positive factor.

Researcher Huh predicted, "Next year, profitability improvement is possible through the expansion of Remsima SC supply volume and emergency use approval of the COVID-19 treatment, and continuous sales growth is expected due to the acquisition of Takeda's Asia-Pacific business division," adding, "The U.S. launch of Remsima SC is planned for the second half of 2022, along with the groundbreaking of the third plant, so growth can continue through product launches and production capacity expansion."