[Click e-Stock] "Hwanin Pharmaceutical to See Gradual Profit Recovery After Q3"

On September 9, LS Securities predicted that Hwanin Pharmaceutical's operating profit would gradually improve. However, considering five consecutive quarters of negative operating profit growth, the target price was revised downward from 16,000 won to 14,000 won.

Jung Hongshik, a researcher at LS Securities, explained, "We expect Hwanin Pharmaceutical's operating profit to gradually recover starting from the third quarter. This expectation is based on a base effect from the drug price cuts implemented in July 2024, as well as a gradual improvement in profit margins due to increased utilization rates at the new plant."

He added, "However, from the perspective of operating profit, a year-on-year growth trend is likely to become more pronounced only after 2026, so profit recovery should be considered from a mid- to long-term perspective."

Researcher Jung stated, "Sales of psychoneurotic pharmaceuticals had shown a compound annual growth rate (CAGR) of 9.1% over the past 10 years, but slowed somewhat from 98.9 billion won in the first quarter of 2024 to around 100.5 billion won in the first quarter of this year. This is believed to be due to a high base effect from the introduction of new products last year."

LS Securities maintained a 'Buy' investment opinion on Hwanin Pharmaceutical and lowered the target price to 14,000 won. Jung explained, "This reflects five consecutive quarters of negative operating profit growth since the second quarter of 2024, and we plan to raise the target price again once operating profit recovers in the future."