[Click eStock] "Yuhan Yanghaeng, 4Q Earnings Below Expectations... Selling and Administrative Expenses Burden"

[Asia Economy Reporter Lee Jung-yoon] Hana Financial Investment announced on the 17th that it has revised its earnings estimates for Yuhan Corporation this year, lowering the target stock price from the previous 92,000 KRW to 87,000 KRW. The buy investment rating was maintained.

Yuhan Corporation's sales in the fourth quarter of last year decreased by 8.1% year-on-year to 424 billion KRW, and operating profit dropped by 82.5% to 4.8 billion KRW. These results fell short of the estimates of 465.3 billion KRW in sales and 22.3 billion KRW in operating profit. Jaekyung Park, a researcher at Hana Financial Investment, analyzed, "The main reasons are the negative base effect of approximately 78 billion KRW in milestone payments from Janssen reflected in Q4 2020 and increased advertising expenses due to marketing of WiseBiome and animal pharmaceuticals."

This year, sales are expected to reach 1.8426 trillion KRW, and operating profit 58.2 billion KRW, representing increases of 9.2% and 19.8% respectively compared to the previous year. The increase is attributed to growth in prescription drug sales and the lifestyle health business division despite the gap in royalty income. However, Researcher Park predicted, "Profitability improvement will be limited this year due to increased selling and administrative expenses caused by advertising expenses and increased routine development costs."

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