Bio Industry
The author is an author of NH Investment & Securities. He can be reached at pk.park@nhqv.com -- Ed.
Since end-2022, the appeal of growth stocks has elevated, whereas large-cap healthcare stocks (S&P500 Healthcare Index), which outperformed the index significantly as defensive plays throughout 2022, have languished. But recently, starting in mid-March, the S&P500 Healthcare Index has started to rise again amid renewed investor appetite for defensive plays following the outbreak of the global banking crisis. Thus, after having been neglected since the start of the year, large-cap health care stocks are now drawing eyes. We advise investors to focus upon clearly undervalued firms, suggesting Hanmi Pharm as our top pick for big pharmas. GC Biopharma also warrants attention.
In 2022, Hanmi Pharm’s depreciation for tangible assets upped by 70% compared to the 2020 level, and in 2021 the figure exceeded that of Celltrion. Meanwhile, Hanmi Pharm’s ratio of depreciation to sales in 2022 upped to a level similar to that of Samsung Biologics on full-fledged write-offs for both Hanmi Bio Plant and Hanmi Paltan Plant. Despite the large size of its operations, Hanmi Pharm’s lack of meaningful sales (due to weak utilization and the occurrence of depreciation) has been sapping OPM. We draw attention to the fact that the firm’s operating cash flow is higher than its actual OP.