[Click eStock] "Chong Kun Dang, Operating Profit Margin Declines Due to Increased R&D Expenses in 2Q"…Target Price Down

[Asia Economy Reporter Ji Yeon-jin] Daishin Securities announced on the 6th that it expects a decrease in operating profit margin for Chong Kun Dang due to increased research expenses, and lowered the target stock price by 8.3% to 110,000 KRW.

Chong Kun Dang's separate sales for the second quarter of this year are expected to increase by 12.0% year-on-year to 366.2 billion KRW, but operating profit is projected to decrease by 20.7% to 26.7 billion KRW. This year, products introduced such as ‘K-CAB’ and ‘Prolia’ are expected to show high sales growth, and stable sales growth of key products is anticipated, but due to the base effect related to the reversal of provisions in the same period last year and increased research and development and sales marketing expenses from expanding clinical trials of new drug pipelines, the operating profit margin is expected to decrease from 10.3% in the second quarter of last year to 7.3% in the second quarter of this year.

Current research and development expenses for the second quarter of this year are estimated to have increased by 9.8% year-on-year to 43.8 billion KRW. However, Yoonjin Im, a researcher at Daishin Securities, stated, "the Phase 1 clinical trial results of CKD-510 (Charcot-Marie-Tooth disease) presented at the International Peripheral Neuropathy Conference in May demonstrated excellent safety and tolerability," adding, "the Lucentis biosimilar CKD-701 is expected to obtain domestic approval in the second half of the year and possibly launch within the year, and since the Nesf biosimilar ‘Nesvel’ has export records to Japan, Southeast Asia, and the Middle East, the overseas market entry of CKD-701 is also expected to accelerate."