[Click eStock] Disappointing 4Q... KB Securities Lowers Hanmi Pharm Target Price by 8%

Operating Profit Halved Year-on-Year
Impact of Delayed Flu Season

As the flu season was delayed more than expected, Hanmi Pharmaceutical posted disappointing results for the fourth quarter of last year. Operating profit was halved compared to the same period last year, leading securities firms to lower their target stock prices.

On the 5th, KB Securities lowered Hanmi Pharmaceutical's target stock price by 8.3%, from 360,000 KRW to 330,000 KRW. The closing price the previous day was 238,000 KRW. The investment rating of 'Buy' was maintained.

This was due to the poor performance that fell significantly short of expectations for the fourth quarter of last year. On a consolidated basis, Hanmi Pharmaceutical recorded sales of 351.6 billion KRW and operating profit of 30.5 billion KRW in the fourth quarter of last year. Sales decreased by 16.7% and operating profit by 56.6% compared to the same period last year. Both figures were below market consensus by 5.5% and 21.2%, respectively.

Performance was weak across subsidiaries as well. On a separate basis, Hanmi Pharmaceutical's sales were 280.5 billion KRW, down 12.6% year-on-year. Although key products such as Rosuzet and the Amozaltan family showed growth, this was attributed to the delayed flu season.

Beijing Hanmi's sales were 74.9 billion KRW, down 27.5% during the same period. The decrease was due to the base effect from mycoplasma infectious diseases, temporarily slowing the growth of operating profit. Hanmi Precision Chemical's sales also fell sharply to 20.7 billion KRW, down 38.6% year-on-year. Sales of high-margin contract development and manufacturing organization (CDMO) products declined, and the delayed flu season along with reduced raw material exports were additional negative factors.

Researcher Kim Hyemin of KB Securities analyzed that this year, focus should be placed on the research and development (R&D) sector. Researcher Kim said, "In the case of LA-TRIA, effects can be expected even for patients in the weight loss plateau phase," and added, "LA-UCN2 has high appeal as a standalone obesity treatment, and when combined with LA-TRIA, it could emerge as a solution to the muscle mass loss side effect."