[Click eStock] "Celltrion, COVID-19 Treatment Production Volume Below Expectations" Outlook... Target Price

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 19th that it has lowered the target price to 360,000 KRW, forecasting that the production scale of Celltrion's COVID-19 treatment drug, Rekirona, which received conditional approval from the European Medicines Agency (EMA) last month, will decrease compared to initial expectations.

Sun Min-jung, a researcher at Hana Financial Investment, explained, "Celltrion mentioned a maximum production scale of 3.2 million doses for Rekirona, but realistically, it is estimated that 1.3 million doses will be produced this year at the currently secured Plant 1. Considering the size of Celltrion's factory and the number of products being produced, it is difficult to significantly increase this estimate for this year."

Assuming Celltrion's Rekirona sales volume this year is about 1.4 million doses, including the 100,000 doses produced last year, and applying the Celltrion Healthcare supply price of 600,000 KRW, the estimated sales amount is approximately 840 billion KRW.

Celltrion's first-quarter sales are expected to be 496.7 billion KRW, a 33.2% increase year-on-year on a consolidated basis, and operating profit is expected to increase by about 63% to 195.9 billion KRW (OPM, 39.4%). Although production facilities were allocated in the fourth quarter of last year to produce Rekirona, sales performance was weaker than expected because Rekirona was not supplied to Celltrion Healthcare.

However, with the supply contract for Rekirona to Celltrion Healthcare signed in the first quarter, Celltrion's performance is expected to normalize. The Rekirona supplied this time is estimated to be about 100,000 doses produced in 2020, with an estimated sales amount of approximately 60 billion KRW.

Rekirona is currently being produced at Plant 1. It is estimated that the production line for Remsima SC, which was produced at Plant 1, has been converted to Rekirona. Remsima SC has been supplied since 2019, and the total supply amount to the distribution affiliate Celltrion Healthcare reached 816.8 billion KRW. However, since Remsima SC, which began sales in Europe from the first quarter of last year, only achieved sales of 40 billion KRW last year, it is estimated that Celltrion Healthcare's current inventory is close to 800 billion KRW. Production of Remsima SC is expected to decrease this year, and sales volume is forecasted to decline by about 38% compared to the previous year.

However, Researcher Sun emphasized, "Although Rekirona has obtained conditional approval, the expectations for it have not yet been reflected in the stock price," adding, "Once supply contracts are actually signed with each country, the stock price is expected to rebound clearly, so now is the time to attempt buying at the current low point."