[Click eStock] "SK바사 Needs Time to Wait... Must Focus on the 'Next Corona'"

[Image source=Yonhap News]

[Asia Economy Reporter Myung-hwan Lee] Meritz Securities announced on the 2nd that it maintains a buy rating and a target price of 94,000 KRW for SK Bioscience. This is due to expectations of business expansion into vaccines for diseases other than COVID-19, despite some deterioration in earnings.

SK Bioscience's sales in the third quarter of this year recorded 91.1 billion KRW, down 58.8% year-on-year, and operating profit dropped 787% to 21.4 billion KRW. Meritz Securities explained that the decline in sales was influenced by a decrease in contract manufacturing organization (CMO) sales of Novavax vaccines and delayed shipments of its own COVID-19 vaccine, 'Skycovione,' resulting in lower reflected sales. A slight increase in research and development (R&D) expenses compared to last year was also factored in.

However, it is expected to grow compared to the previous quarter due to the inclusion of raw material sales from the government's vaccine pre-purchase worth approximately 140 billion KRW. It was also noted that finished vaccine sales will be recognized in installments until next year.

Meritz Securities emphasized the importance of focusing on the company's mid- to long-term strategy post-COVID-19. SK Bioscience has presented strategies such as cooperation with international organizations like the World Health Organization (WHO) and the Coalition for Epidemic Preparedness Innovations (CEPI), and entry into the public healthcare market through selection for national essential vaccinations. Based on its vaccine production know-how, Meritz Securities expects steady growth through expansion into contract development and manufacturing organization (CDMO) for viral vectors, cell and gene therapies, and the introduction of messenger RNA (mRNA) platform technology.

Researcher Song-yi Park of Meritz Securities stated, "Currently, vaccines are contract-manufactured mainly for Novavax, but in the future, partnerships with various clients are planned," adding, "With abundant cash reserves, technology acquisition through various mergers and acquisitions (M&A) is expected."

Researcher Park further said, "The previously uncertain business strategy after the endemic phase is becoming clearer with CEPI funding," and added, "Following the development of vaccines for Japanese encephalitis and Lassa fever, expansion into areas such as RSV vaccines, CMV vaccines, obesity, and cancer vaccines based on platform technology is expected, so we maintain a 'buy' rating."

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