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Chong Kun Dang |
[Alpha Biz= Kim Sangjin] NH Investment & Securities has commented on Chong Kun Dang's performance, noting that the company is expected to fall short of consensus for the fourth quarter of last year. The key factors for this underperformance include the high cost ratios of newly introduced products and increased research and development (R&D) expenses. The investment firm maintains a "Buy" recommendation but has lowered the target price to 130,000 KRW.
According to NH Investment & Securities, Chong Kun Dang's standalone sales for Q4 last year are expected to decline by 19% year-on-year to 4.045 trillion KRW, with operating profit dropping by 92% to 92 billion KRW, falling below consensus. This decline is mainly attributed to the recognition of the licensing agreement payment for CKD-510 with Novartis in November 2023, as well as higher cost ratios for new products such as Pexuclu and Godex and a slight increase in R&D expenses.
For this year, NH Investment & Securities predicts a revenue increase of 8% to 1.681 trillion KRW and a 1% rise in operating profit to 90.8 billion KRW. They expect combined sales from Pexuclu and Godex to reach approximately 166 billion KRW, making up around 10% of the total annual revenue.
However, NH Investment & Securities warns that growth in operating profit may be relatively slow due to the focus on new products and the rise in R&D costs.
The firm also pointed out that Chong Kun Dang's valuation remains under a discount, and there will be continued concerns regarding the timing of reflecting new drug values, with the clinical update of Novartis' CKD-510 being a key milestone to watch.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
