[Click eStock] "Daewoong Pharmaceutical, Continued Performance Improvement Driven by ETC and Nabota Growth"

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[Asia Economy Reporter Minji Lee] Hanwha Investment & Securities maintained its buy rating and target price of 210,000 KRW for Daewoong Pharmaceutical on the 18th. This is based on the expectation that the growth of ethical drugs (ETC) and Nabota will continue to drive performance improvements.

Daewoong Pharmaceutical expanded its sales and profitability in the fourth quarter due to strong overseas business of ethical drugs and Nabota. In the fourth quarter of last year, Daewoong Pharmaceutical recorded sales of 257.3 billion KRW and operating profit of 24.7 billion KRW, growing 14% and 172% respectively compared to the same period last year. Despite a slight decrease in Nabota sales due to changes in revenue recognition accounting standards, the company posted strong results. The ETC division drove sales growth by achieving a record high performance with 205.2 billion KRW, a 15% increase from the previous year. The operating profit margin for the fourth quarter was 9%, maintaining a high profitability level above 9% for three consecutive quarters.

Kim Hyungsoo, a researcher at Hanwha Investment & Securities, said, “The factors improving profitability were the increased proportion of ETC products with lower cost ratios and the growth in Nabota sales,” adding, “The decrease in COVID-19 research and development and litigation costs was also reflected.”

On a separate basis, the company recorded sales of 1.0552 trillion KRW and operating profit of 95.5 billion KRW last year, marking a 12% and 656% increase respectively compared to the previous year, achieving strong results. With double-digit sales growth and a high operating profit margin of 9.1%, which rose 8 percentage points from the previous year, the company successfully achieved a full-scale turnaround. This marked the first double-digit growth since 2015, continuing external expansion, and confirmed profitability improvement compared to the average operating profit margin (4.6%) since 2014, excluding 2020 when significant non-recurring expenses were incurred.

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In particular, the ETC division achieved 778 billion KRW in sales, a 10% increase compared to the same period last year, driven by the expansion of sales of highly profitable products. Nabota showed strong sales in domestic and overseas markets, recording 79.6 billion KRW, a 58% increase year-on-year.

Kim Hyungsoo of Hanwha Investment & Securities analyzed, “The commercialization of the self-developed new drug ‘Pexuprazan,’ which received product approval from the Ministry of Food and Drug Safety in December, will proceed in the first half of the year, leading to growth in ethical drug sales,” adding, “Expansion into new countries such as China and increased domestic sales of Nabota will further enhance profit improvement.”

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