Hugel's Botulax on Track... Target Price Raised by 10%

[Asia Economy Reporter Oh Ju-yeon] Hugel is gaining attention in relation to the development of Botulax in the first half of this year. KB Securities stated that Hugel's botulinum toxin formulation 'Botulax' is progressing smoothly through clinical trials and approval processes, and profitability is expected to improve along with this. Accordingly, the investment opinion on Hugel was maintained as 'Buy,' and the target stock price was raised by 10.9% to 510,000 KRW.

Lee Tae-young, a researcher at KB Securities, explained, "Upon Botulax's approval in China in the first half of this year, an increase in toxin exports to China, which have relatively high profitability, is expected from the second half (a 7.0% upward revision compared to the previous toxin export forecast). Additionally, reflecting the improvement in profitability due to diversification of distribution channels following the acquisition of Chinese sanitary permits for major cosmetics in January, the 2020 operating profit estimate was raised by 12.3%."

Hugel's sales and operating profit for the fourth quarter of last year are expected to record 56.9 billion KRW and 19.6 billion KRW, respectively. Although cosmetics sales are expected to decline significantly compared to the same period last year due to a high base, the balanced growth of domestic and overseas toxin and filler sales is expected to largely offset the sales decline.

The researcher noted, "In particular, an expansion of overseas filler exports centered on Europe and a gradual recovery of toxin exports to Asia are anticipated."

Due to the increased proportion of toxins and fillers, which have relatively high profit margins, the operating profit margin is expected to improve by 7.1 percentage points compared to the same period last year, reaching 34.4%.

Regarding Botulax, it is expected that official sales will be possible from the second half of the year after obtaining approval in China. In the case of the United States, the Bless III clinical trial is expected to conclude six months earlier than anticipated, in the first half of this year, aiming to submit the Biologics License Application (BLA) in the fourth quarter. Reflecting the six-month advancement of approval and launch timing, the value of Botulax in the U.S. market is analyzed at 484.3 billion KRW.

The submission of the approval application for entry into the European market is also expected to take place in this first half of the year.

The researcher stated, "In Hugel's case, the dependence on toxin sales through unofficial channels in China is considered relatively low. Furthermore, since the full-scale expansion of sales to China is expected to occur from the second half after official approval, the impact of the novel coronavirus infection (Wuhan pneumonia) on Chinese consumer contraction is expected to be limited."

He added, "However, if the current situation prolongs, there is a possibility of delayed sales occurrence and adjustments to profit estimates."

This content was produced with the assistance of AI translation services.