[Click e-Stock] "Green Cross, Weaker Performance Due to With Corona... Target Price Lowered"

[Asia Economy, reporter Kwon Jaehee] Korea Investment & Securities maintained its "Buy" rating on Green Cross (GC Pharma) on the 13th, while lowering its target price by 21.7% from 230,000 won to 180,000 won.

Green Cross's consolidated sales for the third quarter are projected to be 440.7 billion won. This is a 5.4% decrease compared to the previous year and falls short of the consensus estimate by 8.6%. Operating profit is expected to be 48.7 billion won, which is in line with the consensus. The distribution performance of the Moderna vaccine in the third quarter of last year is considered to have created a base effect. The main reasons cited are the shift to the "With Corona" policy during the COVID-19 pandemic, and the slowdown in the administration of additional booster shots among those already vaccinated, which led to decreased vaccine demand. In addition, a sales gap was identified due to the replacement of probiotic product lines sold through home shopping channels.

Although the macroeconomic environment has deteriorated, the scheduled pipeline momentum is seen as a positive factor. Green Cross's immunodeficiency treatment, IVIG-SN 10%, received a Complete Response Letter (CRL) from the FDA in February. The main issue is the need for a visual inspection of the production site. While an on-site inspection was initially expected to take place in the fourth quarter of this year, the schedule has not yet been disclosed, making a delay into the first half of 2023 highly likely. However, since the company has had time to prepare during the delay, it is expected that there will be no significant difficulties in obtaining approval after the inspection.

Oh Uirim, a researcher at Korea Investment & Securities, stated, "Despite the continued decline in vaccine demand and worsening macroeconomic conditions, which have caused the average EBITDA multiple for major pharmaceutical companies to fall from 14 times to 12 times, we are maintaining our Buy rating on Green Cross due to its upcoming pipeline momentum." He added, "Additionally, sentiment is expected to improve as the company has a shingles vaccine in Phase 2 clinical trials and a treatment for Hunter syndrome, a rare disease, both scheduled for the first and second halves of next year, respectively."

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