[Click eStock] Daewon Pharmaceutical, Good Corporate Value but...

[Asia Economy Reporter Junho Hwang] SangSangIn Securities has lowered the target price to 23,000 KRW, citing continued sluggish stock performance despite expecting an increase in Daewon Pharmaceutical's corporate value.

Daewon Pharmaceutical achieved consolidated sales of 234.1 billion KRW in the first half of this year, representing a 43.9% increase compared to the previous year. Operating profit recorded 24.1 billion KRW, a 995.5% increase year-on-year.

There was significant sales growth in key products Pelubi and KoDaewon Forte. The performance of KoDaewon Forte, a proprietary developed antitussive and expectorant, increased, and it is expected that results will further improve as sales shift to KoDaewon Forte S, which has a better gross margin. The comprehensive cold medicine KolDaewon saw a sharp increase in demand due to COVID-19.

However, the operating profit margin slightly fell short of expectations. Although operating profit grew significantly compared to the previous year in the first half, the lower-than-expected figure appears to be due to a combination of increased selling and administrative expenses such as incentive payments and rising costs.

Researcher Taegi Ha of SangSangIn Securities stated, "The estimated PER based on this year's earnings is 10 times," adding, "The average PER for the four years before COVID-19 was over 15 times, so the current PER level is historically low."