[Click eStock] Celltrion, Strong 3Q Performance... 4Q New Drug Approval Anticipation

Incheon Songdo Celltrion Plant 2 exterior./Incheon=Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Junho Hwang] Although Celltrion posted results exceeding market expectations in the third quarter of this year, there are forecasts that it will experience negative growth in the fourth quarter.

In the third quarter of this year, Celltrion delivered results surpassing expectations. On a consolidated basis, sales reached 645.6 billion KRW, a 60.6% increase compared to the previous year. Operating profit also achieved 213.8 billion KRW, showing a 28.1% increase compared to the same period last year. The consensus from Hana Securities for this quarter was sales of 588.0 billion KRW and operating profit of 207.2 billion KRW.

In the securities industry, it was analyzed that the increase in performance was due to the recognition of unrealized gains (less than 100 billion KRW) from the sale of shares in Celltrion USA. Previously, Celltrion USA was a consolidated subsidiary of Celltrion but was acquired by Celltrion Healthcare. Accordingly, the standard inventory assets were recognized as sales. By product, sales were 219.5 billion KRW for Remsima IV (an 88.3% increase year-on-year), 19.4 billion KRW for Truxima (-84.5%), and 77.5 billion KRW for Herzuma (863.8%).

However, gross profit margin decreased from 50.4% in the previous quarter to 46.5%. Researcher Hyemin Ha from Kiwoom Securities said, "It appears to be due to changes in the product mix," adding, "Truxima production decreased compared to the previous quarter (sales proportion 10% in Q2 this year → 3% in Q3), and this decline is presumed to be due to supply adjustments caused by the transition to direct sales by Celltrion Healthcare in Europe."

The consolidated operating profit margin also declined. Researcher Hyejin Park from Hana Securities analyzed, "The operating profit margin this quarter recorded a slight decrease to 33.1% compared to 34.1% in the previous quarter," and added, "Despite an increase in cost ratio due to sales from Remsima IV CMO production and unrealized gains from Celltrion USA, non-recurring expenses such as diagnostic kit transportation costs normalized, reducing selling and administrative expenses from 96.8 billion KRW to 86.2 billion KRW compared to the previous quarter, maintaining profitability."

In the fourth quarter of this year, unrealized gains (less than 100 billion KRW) from the sale of shares in Celltrion USA will not be reflected. NH Investment & Securities expects Celltrion to record sales of 580.0 billion KRW and operating profit of 193.9 billion KRW in Q4. Researcher Byungguk Park from NH Investment & Securities explained, "Sales are estimated to be 6% lower and operating profit 13% lower compared to the previous year, but excluding sales of Regkirona (99.5 billion KRW) and diagnostic kits (80.8 billion KRW) from last year's Q4 sales, the estimate reflects a 31% growth in sales."

Researcher Hyemin Heo said, "Whether profitability improves in Q4 this year will be a key factor for short-term stock price direction, which is expected to depend on the shipment proportion of Remsima CMO volumes and the shipment of new products," and added, "Additionally, investment sentiment may change depending on the Celltrion Healthcare earnings announcement on the 11th." However, she added, "Approval for Uplima in the U.S. is expected within the year, and the anticipation for its launch next year remains valid."

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