[Click eStock] "United Pharm, Stock Undervalued... Buy and Hold Recommendation"

Sangsangin Securities maintained a "buy" rating on United Pharmaceutical, a pharmaceutical company focused on the ETC (ethical drugs) business, on the 31st, stating that "from a long-term perspective, holding after buying may take time, but it is a company that can achieve investment returns above the market average."

However, they lowered the target price from the previous 37,000 KRW to 28,000 KRW, reflecting a decline in the price-to-earnings ratio (PER) of small and mid-sized pharmaceutical stocks. The closing price on the 28th was 19,750 KRW, indicating an upside potential of 41.8%.

On the same day, researcher Ha Taegi of Sangsangin Securities stated, "With a market capitalization of only 320 billion KRW, the stock price is undervalued. While sales and profits have steadily increased, the stock price has declined, causing the estimated PER based on this year's earnings to fall to around 5.4 times."

United Pharmaceutical has secured competitiveness by launching improved new drugs every year, leading to stable growth in sales and operating profit. However, recently, the overall company sales growth rate has declined due to sluggish domestic demand and the impact of medical strikes. Last year, on a separate basis, sales increased by 3.5% to 288.7 billion KRW, and operating profit rose by 2.4% to 56.3 billion KRW. Exports grew by 21.6% to 28.9 billion KRW, mainly in Southeast Asia, driven by price increases and a high exchange rate.

Sales by segment are growing mainly in the cardiovascular and digestive systems. As of last year, major product sales were 41.4 billion KRW for the antithrombotic Silostan, 29.9 billion KRW for the combination dyslipidemia drug Artmac Combizel, 16.6 billion KRW for the functional indigestion drug Gastim, 14.2 billion KRW for the hypertriglyceridemia drug Ometilcutret, and 12.0 billion KRW for the peptic ulcer drug Raveduo.

Researcher Ha said, "The peptic ulcer drug Rabemini tablet, launched last year, grew to 11.5 billion KRW annually," adding, "With this improved new drug growth (8.4%), the proportion of improved new drugs expanded from 55% in 2023 to 58% last year, and the target for this year is 60%." This year, they plan to launch improved new drugs such as the hyperlipidemia treatment Pitaric capsule (Q3), the hyperlipidemia treatment Artmac Combizel, and asthma and COPD inhalers (Sere-terol Active Air, Q4).

United Pharmaceutical maintains an operating profit margin around 20%, one of the highest in the industry. Researcher Ha stated, "With the expansion of sales of high-margin improved new drug products, the cost of goods sold ratio is fixed in the low 40% range, and selling and administrative expenses are fixed in the 37% range," adding, "With this profit structure maintained, the total company sales this year are expected to increase by 3.9% to 300 billion KRW, and operating profit is forecasted to rise by 6.4% to 59.9 billion KRW."

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