[Click eStock] Daewoong Pharmaceutical, Stock Price Reflecting Litigation Outcome... "Focus on Strong Performance"

KTB Investment & Securities Report
Neutral → Buy... Target Price Up 8%

[Asia Economy Reporter Minji Lee] On the 5th, KTB Investment & Securities upgraded its investment opinion on Daewoong Pharmaceutical from neutral to buy and raised the target price by 8% to 130,000 KRW. This decision is based on the judgment that since the worst lawsuit outcome is already reflected in the stock price, attention should be paid to the improving earnings trend.

[Image source=Yonhap News]

In the third quarter, the company recorded separate sales of 248.9 billion KRW, estimated to be about 9% higher than the market expectation (228.5 billion KRW). Compared to last year, this is an increase of about 3%. In the domestic market, the cancellation of Meditoxin’s approval had a positive spillover effect, and in the export sector, sales significantly increased due to the initial shipment to Canada.

Separate operating profit was 7 billion KRW, a 151% increase compared to the same period last year. Although 4 billion KRW in disposal costs for discontinued Albis inventory and 4.5 billion KRW in ITC lawsuit expenses were reflected, profitability greatly increased due to the high profitability of Nabota.

In the fourth quarter, sales are expected to reach 264.8 billion KRW and operating profit 8.2 billion KRW, representing growth of 1% and 508% respectively compared to the same period last year. ITC lawsuit expenses of 3 billion KRW and Albis inventory disposal costs of 4 billion KRW are expected to be reflected. Nabota sales are expected to be 12 billion KRW, with domestic and export sales each estimated at 6 billion KRW.

Researcher Hyerin Lee of KTB Investment & Securities explained, “According to provisional customs statistics, the export amount of botulinum toxin to the U.S. in October was 3.7 billion KRW, marking meaningful sales for the first time in seven months since March,” and added, “In the domestic market, the positive spillover effect from the cancellation of Meditoxin’s approval is expected to continue.”

Future points of focus include the international ophthalmology conference presentation of HL036, the U.S. Phase 3-2 IND progress, and the domestic product approval and launch of Fexurprazan within the year. If positive R&D momentum occurs, it could be a time to consider stock price appreciation.

Researcher Hyerin Lee said, “The target price reflects an adjustment of the equity value following the upward revision of HanAll Biopharma’s target market capitalization by 600 billion KRW at the end of August,” and added, “Considering the possibility that the final ITC lawsuit result announced on the 19th may draw attention to compensation issues related to Evolus, a partial discount rate was also applied.”

She continued, “Although it may be a hasty judgment with the unpredictable ITC lawsuit result just two weeks away, excluding the HanAll Bio equity value, the current corporate value of around 500 billion KRW already reflects the worst-case lawsuit outcome.”

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