Green Cross Anticipates Performance Growth with Main COVID-19 Vaccine CMO Contract

[Asia Economy, reporter Jang Hyowon] Expectations for Green Cross's performance growth this year are rising after the company succeeded in winning the domestic regulatory approval and distribution bidding for Moderna's COVID-19 vaccine in the United States.

According to the Financial Supervisory Service's electronic disclosure on February 28, Green Cross recorded sales of 307.8 billion KRW in the fourth quarter of last year, up 17.8%, with an operating loss of 22.4 billion KRW. The average market forecast for operating profit had been in the 10 billion KRW range, so the results fell well short of expectations.

The main reason for the operating loss was a 26.7% increase in selling and administrative expenses compared to the same period the previous year. The causes are analyzed to be one-off incentives of about 8 billion KRW, increased advertising expenses, and excessive execution of ordinary R&D expenses. In addition, sales of blood products, which have a relatively high cost ratio, rose by 15.9% compared to the previous quarter, resulting in an 8.8 percentage point increase in the cost of goods sold ratio.

However, expectations for this year's performance are growing due to the main contract for COVID-19 vaccine CMO and other factors.

On February 26, according to the Public Procurement Service's National Electronic Procurement System (Nara Jangteo), GC Green Cross was selected as the successful bidder for the "Moderna Messenger Ribonucleic Acid (mRNA)-1273 Vaccine Approval and Domestic Distribution" project, which was announced by the Korea Disease Control and Prevention Agency that morning. The project amount is approximately 34.2 billion KRW.

Lee Myungsun, a researcher at Shin Young Securities, stated, "After signing a fill-finish contract with CEPI (Coalition for Epidemic Preparedness Innovations), Green Cross is in negotiations for a main contract with COVID-19 vaccine developers supported by CEPI, and the outcome of these talks is crucial." She added, "Since the fill-finish production capacity exceeds 1 billion doses, additional contracts beyond CEPI are also possible."

She continued, "Furthermore, with the successful bid for the 34.2 billion KRW domestic regulatory approval and distribution contract for the Moderna vaccine, expectations for vaccine order contracts are rising."

She said, "We expect continued growth in vaccine sales and solid performance from subsidiaries this year, so we are raising our investment recommendation to 'Buy' and increasing the target price to 430,000 KRW." She further explained, "In particular, reflecting only the confirmed CEPI contract, we estimate CMO sales at 395.5 billion KRW this year, based on production of 350 million doses."

Additionally, she added, "Although the contracted products and specific contract terms have not yet been finalized, given the urgent need for global vaccine supply, we expect the main contract to be signed within the first quarter."

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