[Click eStock] "Recovery in Prescription Drugs Due to Vaccine Vaccination... Dong-A ST, Surprise Earnings"

[Asia Economy Reporter Ji Yeon-jin] SK Securities announced on the 3rd that it maintains a target price of 110,000 KRW and a buy rating for Dong-A ST, noting that the previously sluggish growth rate of ethical drugs (ETC) is improving as vaccinations increase.

Researcher Lee Dal-mi of SK Securities stated, "The ETC growth rate is expected to rise next year as well, and the Stelara biosimilar, which was licensed out to Intas, is currently undergoing global Phase 3 clinical trials," adding, "With additional milestone payments expected, it is anticipated to drive performance growth in 2022."

Dong-A ST's sales in the third quarter of this year increased by 4.3% year-on-year to 151.9 billion KRW, and operating profit surged 71.8% to 11.6 billion KRW, delivering an earnings surprise. The ETC segment grew by 24.7%, leading the performance. However, overseas sales (-25.9%) and medical devices (-

17.6%) showed weakness.

In the fourth quarter of this year, solid growth in the ETC segment and recognition of some deferred sales from the overseas segment in the third quarter are expected to lead to a recovery in overseas performance. Although fourth-quarter sales are expected to increase compared to the third quarter, operating profit may vary depending on SG&A expenses.