[Click eStock] "Disappointing 1Q for Nokshipja, Improvement Expected in Second Half"

Slow Expansion of Aliglo Prescriptions...
Acquired Subsidiaries Remain in the Red

Green Cross's subsidiary continues to incur losses, and some overseas sales have been deferred, leading to first-quarter results this year that are expected to fall short of expectations. However, analysis suggests that performance improvement is possible from the second half of the year.

On the 15th, Daol Investment & Securities maintained Green Cross's target stock price at 200,000 KRW and its investment rating as 'Buy' based on these factors. The closing price the previous day was 117,900 KRW.

The first-quarter results for this year are estimated at consolidated sales of 415.2 billion KRW and operating profit of 5.8 billion KRW. Sales are expected to increase by 16.4% year-on-year, with a turnaround from an operating loss to profit.

Sales growth appears to be driven by expanded prescriptions of the high-margin drug Peramiflu (influenza treatment), growth in domestic and overseas blood product sales, and revenue from the varicella vaccine Maricella. However, losses at ABO Holdings, acquired earlier this year, and its subsidiary GC Cell are expected to continue, resulting in performance falling short of market expectations.

The slower-than-expected expansion of prescriptions for the high-priced drug Aliglo, due to prior authorization (PA) procedures by U.S. insurers, also hindered performance. Prescription growth is anticipated to pick up from the second half of the year.

Subsidiary ABO Holdings is expected to return to profitability in the fourth quarter of this year. From the second quarter, some deferred overseas influenza vaccine sales and expanded orders for southern hemisphere influenza vaccines are expected to have a positive impact. ABO Holdings' projected performance for this year is estimated at sales of 1.8117 trillion KRW and operating profit of 68.3 billion KRW, representing increases of 7.8% and 112.6%, respectively, compared to the same period last year.

Jisoo Lee, a researcher at Daol Investment & Securities, explained, "Aliglo is produced and sold as a finished product domestically using blood, its main raw material, supplied from the U.S., and local finished product (DP) production is also being considered if necessary, so the impact of U.S. tariffs is expected to be limited. With the expansion of Aliglo prescriptions and a reduction in subsidiary losses, performance is expected to improve as the year progresses."