[Click eStock] "HK Innoen Strong Earnings Growth, Target Price Maintained"

Sangsangin Securities maintained a buy rating and a target price of 70,000 KRW for HK Innoen on the 25th, stating that "strong earnings growth in the first quarter of this year is expected to lead to a stock price level-up in the second half."

Expectations that the sales conditions for K-CAB (tegoprazan, a gastroesophageal reflux disease medication) will improve have been reflected, causing HK Innoen's stock price to rise to the 40,000 KRW range earlier this year, but it has since entered a downward adjustment and currently remains around 37,000 KRW.

On the day, researcher Ha Taegi of Sangsangin Securities revealed, "HK Innoen's first-quarter sales this year are estimated to have increased by 14.4% to 211.5 billion KRW, and operating profit is estimated to have surged by 181.2% to 15.9 billion KRW."

The main product, K-CAB sales are growing significantly. First-quarter K-CAB sales this year are expected to grow substantially to 41 billion KRW, a 69.4% increase compared to the same period last year, also reflecting the effect of increased supply for inventory buildup by Boryung.

In the first quarter, sales of Boryung's Canav (21 billion KRW) and AstraZeneca's Zicduo (21 billion KRW) products are expected to fully offset the impact of the termination of vaccine product sales from US Merck (MSD). Sales of infusion solutions have been slightly revised downward from the initially expected double-digit growth to 5-7% growth in the first half.

Researcher Ha stated, "the expansion of medical school quotas has created uncertainty in the operating environment of general hospitals. However, since the proportion of infusion solution sales is estimated at 13.3%, which is not large, the overall impact on total performance is expected to be limited," adding, "therefore, total sales for this year are projected to grow by 12.7% to 933.9 billion KRW, and operating profit is expected to increase by 44.6% to 95.2 billion KRW."

The results of K-CAB's Phase 3 clinical trials in the US (for erosive and non-erosive patients, involving about 2,000 patients) are expected to be confirmed this year, with an application for product approval to the US Food and Drug Administration (FDA) anticipated by the first half of next year at the latest. A European partner will be selected this year, and European clinical trials will also be conducted. K-CAB has been launched in eight countries (including Indonesia and Mexico), and six additional countries will be added this year, with K-CAB export sales expected to be around 10 billion KRW.

Researcher Ha added, "In conclusion, in the second half of this year, the stock price is expected to be on an upward trend driven by performance improvement and the vision for global market expansion. We continue to maintain a buy rating from a long-term perspective."