[Click eStock] "Dong-A ST Stock Price Expected to Rise After Bottoming Out"

[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities analyzed that Dong-A ST, which recorded an operating loss in the fourth quarter of last year, still has expectations regarding the global licensing transfer of the Stelara biosimilar and that further upward revision of the stock price target is possible.

Dong-A ST's fourth-quarter sales decreased by 18% year-on-year to 128.2 billion KRW, and operating profit turned into a loss of 15.5 billion KRW. This is below market expectations (sales of 163.1 billion KRW, operating profit of 7.1 billion KRW). Due to the resurgence of COVID-19, the ethical drugs (ETC) division recorded 6.1 billion KRW, down 10% year-on-year, and overseas exports decreased by 20% to 30.2 billion KRW. The medical devices (orthopedic implants) contract termination items were reflected, and the medical devices/diagnostics division also fell by 40% to 14.3 billion KRW. The cash cow, Bacchus, also declined by 16% year-on-year due to continued sluggishness in Cambodia caused by COVID-19.

Profitability recorded an operating loss due to sluggish sales, increased labor costs, and increased ordinary R&D expenses of 25.9 billion KRW caused by late-stage pipeline entries (Stelara biosimilar entering Phase 3 in the US and Europe, DA-1241 completing Phase 1b in the US).

This year, sales are expected to increase by 6% year-on-year to 621.1 billion KRW due to the base effect. Operating profit is projected to be 26.4 billion KRW as R&D expenses are expected to increase by about 18% year-on-year to approximately 90 billion KRW.

However, the Stelara biosimilar 'DMB-3115,' which had global sales of 7 trillion KRW as of 2019, entered global Phase 3 last month, raising the possibility of market segmentation with Celltrion with about a one-month difference. Stelara's patent expires in the US in September 2023 and in Europe in January 2024. Kiwoom Securities analyst Heo Hye-min said, "The Stelara biosimilar can generate profits in the near future, with domestic licensing held by Dong-A ST and Japanese licensing by Meiji," adding, "There is a possibility of technology transfer for licensing regions outside Korea and Japan for the Stelara biosimilar, and if milestone income from technology export is received, profitability can improve."

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