[This Week's Hot Pick] Celltrion Achieves Record-High Results and Announces Share Buybacks

High-Margin New Products Outperform Existing Lines
Continued Share Buybacks... Ongoing Shareholder Returns

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Celltrion is drawing significant attention from the securities market after posting its highest-ever quarterly results. According to financial information provider FnGuide, Celltrion ranked among the top 10 most-searched companies in last week's report search rankings. As securities firms simultaneously raised their target prices, the stock price has continued its upward trend. In particular, the company's active efforts to enhance shareholder value, such as through share buybacks, are further boosting the stock's momentum.

High-margin New Products Drive Performance... Operating Profit Up 234%

According to the Financial Supervisory Service's electronic disclosure system on July 23, Celltrion recorded consolidated provisional sales of 961.5 billion KRW and operating profit of 242.5 billion KRW for the second quarter of this year. These figures represent increases of 9.9% and 234.5%, respectively, compared to the same period last year. The operating profit margin reached 25.2%. This marks the highest second-quarter performance in the company's history, and it met the market consensus average forecast.

Sales of biosimilars (biopharmaceutical generics) amounted to 882.8 billion KRW, up 14.1% year-on-year. Notably, for the first time in a quarter, sales of new product lines exceeded those of existing products. The new product lines have higher margins than the existing ones.

Sales of the new products?Remsima SC (marketed as Zymfentra in the US), Yuflyma, Begzelma, and Stekima?totaled 468 billion KRW, an increase of 100.5% compared to the same period last year. This was mainly due to increased sales in Europe. In contrast, sales of the existing products?Remsima, Truxima, and Herzuma?were 414.8 billion KRW, down 23.3%. This is attributed to the high base effect from last year.

The cost-to-sales ratio also improved significantly. Celltrion's cost ratio for the second quarter was about 43%, down 15 percentage points from the same period last year and 4 percentage points from the previous quarter. The decrease is attributed to the reduction in inventory of high-cost existing products and an increased proportion of sales from higher-margin new products.

The market expects Celltrion's performance in the second half of the year to remain strong. According to FnGuide, Celltrion's consensus for this year's sales and operating profit is 4.2723 trillion KRW and 1.1323 trillion KRW, respectively. These represent increases of 20.1% and 130.1% year-on-year.

Ye Nore, a researcher at Hyundai Motor Securities, stated, "Celltrion is set to launch four new biosimilar products in the second half of the year, which is expected to drive sales growth in Europe. The growth of existing products such as Begzelma, Stekima, and Zymfentra, combined with the newly approved product lines and a low-to-high growth pattern, will drive revenue growth in the second half."

Growth of Zymfentra is also noteworthy. This product is the world's only subcutaneous (SC) biosimilar for autoimmune diseases developed by Celltrion and is a representative high-margin product. Lee Heeyoung, a researcher at Daishin Securities, commented, "Zymfentra's second-quarter sales increased by 83% compared to the previous quarter. As actual prescription numbers continue to rise, the likelihood of further sales growth is expected to increase."

Momentum for new drugs is also concentrated in the second half. Celltrion is focusing on next-generation drug development, such as antibody-drug conjugates (ADC) and multi-antibody drugs, to secure future growth engines. Researcher Ye stated, "Global Phase 1 clinical trials for the c-MET ADC pipeline were approved in March, and clinical trials for Nectin-4 ADC and HER2xCD3 are scheduled to begin in the second half. For the bispecific antibody CT-P72, IND (Investigational New Drug) approval is expected within the year."

750 Billion KRW in Share Buybacks This Year Alone... Enhancing Shareholder Value

Alongside strong performance, Celltrion is also continuing its shareholder return initiatives. On July 21, Celltrion announced a decision to buy back approximately 100 billion KRW worth of its own shares. The company has continued share buybacks, citing that its stock is undervalued in the market relative to its growth. Including this latest move, Celltrion has conducted eight share buybacks this year alone, totaling about 750 billion KRW. In addition, including existing treasury shares, the company has retired a total of 900 billion KRW worth of shares.

Furthermore, Celltrion Holdings, the holding company of Celltrion Group, announced on July 4 that it had secured new funds to purchase a total of 500 billion KRW worth of Celltrion shares in two separate transactions. Previously, in April, Celltrion Holdings had also decided to acquire 100 billion KRW worth of Celltrion shares. In addition, Seo Jungjin, chairman of Celltrion Group, and Celltrion Skincure each decided to purchase 50 billion KRW worth of shares, further supporting shareholder value enhancement. Employees also purchased about 40 billion KRW worth of shares through an employee stock ownership plan.

Kwon Haesoon, a researcher at Eugene Investment & Securities, stated, "In March, Celltrion announced its 'Corporate Value Enhancement Policy,' setting targets of achieving a return on equity (ROE) of at least 7% by 2027 (compared to last year's ROE of 2.5%) and returning 40% to shareholders. Celltrion typically announces its results later than other biopharmaceutical companies due to the time required to consolidate overseas subsidiaries' results, but this second quarter, it announced results earlier than ever before, which demonstrates confidence in its improved performance and corporate value enhancement."