[Click eStock] Hwanin Pharm, PER Adjustment... Target Price Down to 15,4000 Won

On the 30th, Kiwoom Securities lowered the target price for Hwanin Pharm from 19,000 KRW to 15,400 KRW, citing expectations of modest external growth in the second half of the year. The investment rating was also adjusted from Buy to 'Outperform.'

In a report on the same day, Minsoo Shin, a researcher at Kiwoom Securities, stated, "We are lowering the target price by applying a forward 4-quarter earnings per share (EPS) of 1,675 KRW and a target price-to-earnings ratio (PER) of 9.2 times." He analyzed, "The company prioritizes external growth by distributing overseas pharmaceutical pipelines as products. Therefore, it has adopted a strategy of increasing the company's scale first and then improving profit margins."

He forecasted third-quarter sales of 64.8 billion KRW and operating profit of 6.7 billion KRW. Researcher Shin said, "Since December 2022, the company has been handling six central nervous system drugs from GlaxoSmithKline (GSK) as products, and steady growth is expected." He added, "However, in the second half of the year, the volume of inventory secured in the market during the early launch phase in the first half is expected to decrease, resulting in a smaller scale of external growth compared to before."

He continued, "The oral treatment for rheumatoid arthritis ‘Arava’ from Sanofi, introduced in January, is progressing in sales to meet the early-year targets." He also said, "Besides the GSK and Sanofi pipelines, the company plans to bring in products that can achieve external expansion."

On August 30, Hwanin Pharm acquired a 30% stake in Bifido, which develops bifidobacteria-based health functional foods and microbiome pharmaceuticals, for 15 billion KRW, becoming the largest shareholder.

Researcher Shin explained, "The company plans to grow its performance through business synergy with its subsidiary AsYou, which is already engaged in the distribution of health functional foods." He added, "AsYou recorded sales of 1.2 billion KRW and a half-year net loss of 300 million KRW in the first half of 2024. For reference, Bifido is currently under a trading suspension for a delisting suitability review after an employee embezzlement case involving about 8.1 billion KRW was uncovered in June."