[Click eStock] "ST Pharm, Buy on Every Dip"... Target Price 200,000 Won

[Asia Economy Reporter Ji Yeon-jin] SangSangIn Securities announced on the 3rd that it has upgraded the business value of oligonucleotide, a key substance in RNA therapeutics, for ST Pharm, and after evaluating the various possibilities of the mRNA platform business, it maintains a buy investment opinion and raises the target price to 200,000 KRW.

Researcher Ha Tae-gi of SangSangIn Securities said, "ST Pharm shares a strategy with Samsung Biologics in that it makes large-scale pre-investments in factories with global competitiveness in fields where the future global market is expected to expand significantly, securing the path to orders," adding, "Since ST Pharm's stock price surged sharply in the short term based on uncertain future businesses, there is a possibility of future corrections, but it is judged that a strategy of buying during each correction by evaluating future potential value is possible."

Last year, ST Pharm's oligo-based API sales surged 99.1% year-on-year to 90 billion KRW. This year, sales are expected to grow 44.4% to 130 billion KRW. The outlook for future orders is bright enough that the supply of Inclisiran (Novartis), a hyperlipidemia drug, has begun in earnest. It is expected that the company turned to operating profit in 2021 due to the growth of profitable oligo-based API sales, and operating profit will grow significantly this year.

However, short-term increases in R&D costs such as clinical trial expenses for COVID-19 vaccines may cause volatility in operating profit, but the explanation is that future uncertainties are relatively low.

ST Pharm is continuously expanding its oligo-based API production plants. Production capacity was 1,600 kg by the end of last year, and it plans to expand by at least 1.1 tons up to a maximum of 3.2 tons by 2022. Additionally, to prepare for rapidly increasing demand, it announced additional facility investment plans to increase capacity to at least 2.3 tons and up to 7.0 tons by the first quarter of 2026.

Various business possibilities are open based on the mRNA platform. In May last year, the first phase of a 4.8 million dose mRNA production plant was completed, and it has now expanded to 110 million doses. This year, there is a possibility of announcing plans to invest 10 billion KRW (including government subsidies) to further expand production to 35 million doses (based on 30 micrograms). ST Pharm derived an mRNA COVID-19 vaccine (STP204) candidate substance in June last year, and on the 24th of last month, it announced that it has applied to the Ministry of Food and Drug Safety for clinical trial approval (IND) as of the end of June 2021.