[Click eStock] "Hwanin Pharm, 2Q Operating Profit Expected to Decline... Target Price ↓"

[Asia Economy Reporter Hwang Yoon-joo] Hanwha Investment & Securities analyzed on the 19th that Hanin Pharm is expected to see a decline in operating profit due to an increase in cost of sales ratio following the acquisition of the Hyangnam plant in the second quarter. Accordingly, the investment opinion 'Buy' is maintained, but the target price was lowered to 23,000 KRW.

Researcher Kim Hyung-soo of Hanwha Investment & Securities stated, "Second quarter sales are expected to rise 9.8% year-on-year to 46.6 billion KRW, while operating profit is expected to fall 17.8% to 6.6 billion KRW."

Researcher Kim explained, "The Hyangnam plant, acquired from Korea Janssen in November 2020 for 46 billion KRW, is preparing to operate in the second half, which is expected to increase the cost of sales ratio (from 49.2% to 53.4%). The operation rate of the Anseong plant has exceeded 90% since 2020, making securing production facilities an unavoidable choice."

He predicted, "Based on the increased production capacity, contract manufacturing sales growth is expected from the second half, resulting in annual sales rising 7.1% year-on-year to 189.7 billion KRW."

He added, "Although production facilities were acquired as an investment for growth, profitability deterioration is inevitable, so a 10% discount rate was applied to lower the target price."