[Click eStock] "Celltrion, Poor Performance Is a Buying Opportunity... Expecting Base Effect"

[Asia Economy Reporter Myunghwan Lee] Hanyang Securities announced on the 2nd that it maintains a buy rating on Celltrion and sets a target price of 280,000 KRW. The reason is that Celltrion's low-growth period can be seen as a buying opportunity.

Hanyang Securities projected Celltrion's sales for the second quarter of this year to be 522.6 billion KRW, a 21% increase compared to the same period last year, and operating profit to be 182.2 billion KRW, an 11.6% increase. The operating profit margin was forecasted at 37.8%. They noted that the amount of biosimilar supply contracts in the second quarter increased significantly to 335.7 billion KRW compared to 273.5 billion KRW in the previous quarter. It was also estimated that drug prices in the European market did not decline compared to the first quarter.

In the first quarter, excluding diagnostic kit sales, there was virtually no growth in the core business of biopharmaceutical sales. The first quarter operating profit margin was also evaluated as the worst since 2018 at 25.8%. However, they assessed that the second quarter of this year is expected to show a rebound after hitting the bottom in the core business.

Hanyang Securities' analysis emphasizes the need to focus on Celltrion's long-term growth potential. They explained that the reason Celltrion's stock price has been poor is due to slowed growth since 2021, resulting in five consecutive quarters of poor performance. However, Celltrion's target market is the entire antibody biopharmaceutical market worth hundreds of trillions of KRW, and long-term growth potential is expected. They explained that high growth due to a base effect can be expected following short-term poor performance.

They also evaluated that from the second quarter of this year, strong performance due to the base effect in the second half of the year can be expected. Specifically, they explained that Avastin biosimilar and Remsima SC will contribute to this year's performance. Next year, the launch of Remsima SC and Uplyma in the U.S. market, as well as the launch of Stelara biosimilar, are scheduled.

Hanyang Securities forecasts Celltrion's sales this year to increase by 14.3% year-on-year to 2.2092 trillion KRW, and operating profit to increase by 1.1% to 790 billion KRW. Researcher Byungyong Oh of Hanyang Securities said, "This year's performance is somewhat disappointing, but we do not doubt Celltrion's long-term growth potential," adding, "We believe that Celltrion's low-growth period is always a buying opportunity."