Celltrion's first quarter earnings fell short of expectations... Celltrion's three brothers 'accompanying decline'

Celltrion’s first quarter earnings fell short of expectations… Celltrion’s three brothers ‘accompanying decline’

As Celltrion’s Q1 2022 earnings fell far short of the stock market’s expectations, the stock prices of the three Celltrion brothers (Celltrion, Celltrion Healthcare, and Celltrion Pharm) ended in decline.

On May 13th, Celltrion finished trading at 145,000 won, down 9,500 won (6.15%) from the previous trading day. It fell to 142,500 won during the day, rewriting the 52-week low. Celltrion Pharm and Celltrion Healthcare also closed down 2.79% and 4.54%, respectively.

Celltrion announced on the same day that its sales in the first quarter increased by 20.6% year-on-year to KRW 550.6 billion and operating profit decreased by 31.5% to KRW 142.3 billion. This was significantly lower than the market average expectations of 526.5 billion won in sales and 77.9 billion won in operating profit.

Lee Na-kyung, an analyst at Heungkuk Securities, said, “The operating profit ratio fell sharply compared to the same period last year due to the drug price cut of Remsima IV, an increase in the sales portion of low-profit diagnostic kits, the cost of developing the inhalation formulation of Lekkorona, and a one-time loss on the Leqirona inventory. did,” he analyzed. Lee Dong-gun, an analyst at Shinhan Financial Investment, also said, “The biggest problem is the deterioration of profitability due to the unit price cut of Remsima IV and Truxima.” Celltrion lowered its drug price earlier this year to compete for price.

On the same day, Shinhan Financial Investment and Heungkuk Securities lowered their target prices for Celltrion to 198,000 won and 190,000 won, respectively. This is lower than the 210,000 won offered by the stock market in November 2019, before the COVID-19 pandemic. Analysts say that during the pandemic, the target price was lower than before the pandemic due to the lack of clear results in treatment and neglect of stock management.

Although Celltrion’s sales in the first quarter decreased compared to the same period of the previous year due to portfolio diversification, Celltrion announced that it would improve its operating profit margin by strengthening cost competitiveness through various improvement activities to improve yield and reduce costs. In addition, additional supply is expected from the continued increase in market share of Remsima and other products in the US market, and if portfolio diversification is stabilized through the expansion of chemical business and IMDs, growth in line with market expectations is expected to be recorded.

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