[Click e-Stock] "Yuhan Corporation Misses Earnings Expectations, R&D Achievements Remain Key"

Strong Results but Below Market Expectations
Continued R&D Achievements... Anticipation for Combination Therapy Strategy

Yuhan Corporation reported first-quarter results that fell significantly short of market expectations (consensus). However, analysts note that the company continues to deliver steady research and development (R&D) achievements, suggesting that its growth potential remains intact.

On May 9, KB Securities lowered its target price for Yuhan Corporation by 9.3% to 165,000 won, citing this background. The previous day's closing price was 109,800 won. However, the 'Buy' investment rating was maintained.

This adjustment was due to first-quarter results missing expectations. In the first quarter of this year, Yuhan Corporation recorded consolidated sales of 491.6 billion won and operating profit of 6.4 billion won. These figures represent increases of 10.6% and 1012.3%, respectively, compared to the same period last year. However, both sales and operating profit fell short of market expectations. In particular, operating profit was 69.9% below the market consensus.

Breaking down the results, the pharmaceutical division saw non-prescription sales of 54.3 billion won and prescription sales of 329.8 billion won, growing by 15.8% and 6.5%, respectively. The health and wellness business recorded sales of 46.7 billion won, up 5.2%. The company attributed this to a focus on high-margin new products, with Dangkyrak establishing itself as a flagship product since its launch.

Overseas sales totaled 87.4 billion won, an increase of 17.9% year-on-year. This was attributed to the completion of the Yuhan Chemical HB-dong line expansion, which enabled the start of commercial production, as well as the full-scale supply of active pharmaceutical ingredients (APIs) for Gilead's AIDS treatment, following a contract signed last year.

R&D expenses reached 50.2 billion won, up 9.9% from a year earlier, mainly due to increased costs for the initiation of HER TKI clinical trials.

Kim Hyemin, an analyst at KB Securities, commented, "At this year's American Association for Cancer Research (AACR), YH32364, an EGFR x4-1BB bispecific antibody, demonstrated dose-dependent antitumor efficacy in animal models. Additionally, immune memory was confirmed after cancer cell reinjection, raising expectations for synergy with the company's immune-stimulating compounds and combination therapy strategies going forward. If R&D achievements and performance improvements continue, the current share price represents an attractive entry point," she explained.