Still Attractive as Defensive Stock
The author is an analyst of NH Investment & Securities. He can be reached at pk.park@nhqv.co. -- Ed.
We expect Celltrion to post 4Q22 OP of W187.8bn, remaining roughly in line with our estimate, but missing consensus. The firm should report steady growth in 2023, backed by additional sales of Remsima SC and Yuflyma. In line, we view Celltrion as being attractive as a defensive stock.
Supply of Remsima SC and Yuflyma resume from 4Q22
We maintain a Buy rating and TP of W240,000 on Celltrion. We expect the firm to book 4Q22 sales of W569.0bn (-8.5% y-y) and OP of W187.8bn (-15.4% y-y), remaining roughly in line with our estimates, but missing consensus.
Excluding a 3Q22 one-off unrealized gain (related to the sale of shares in the USA subsidiary), we estimate that 4Q22 sales increased q-q. While overall OPM likely strengthened slightly on the absence of unrealized profits, we believe that biosimilars OP was sapped by a fall in Lonza CMO shipments.
As for the supply contract (W316.2bn, Dec 29) with Celltrion Heathcare, we forecast Remsima IV’s portion at 43%. But, we confirmed that the supply of Remsima SC and Yuflyma (Adalimumab biosimilar) has begun again. In our view, Celltrion Healthcare’s growth momentum will come from sales of Remsima SC in Europe and Yuflyma in the US and Europe, which is to be confirmed via Celltrion’s supply.
Still attractive as defensive stock
We estimate 2023 sales of W2,580bn (+9.3% y-y) and OP of W874.4bn (+17.7% y-y). With sales of Remsima SC in Europe projected at W368.5bn and those of Yuflyma across all regions at W133.4bn, additional growth at Celltrionin 1H23 is to be led by Remsima SC and Yuflyma. As for products due to be released in 2024, they can be supplied to Celltrion Healthcare in 2H23, though we have yet to reflect such in our earnings estimates.
In addition to expecting the Celltrion Group to prepare for aggressive market expansion from 2024, we draw attention to Celltrion’s merit as a defensive stock thanks to its stable earnings. That said, we view US approval of Yuflyma as presenting a risk factor, noting that approval prior to the existing release date target is required