Celltrion
The author is an analyst for NH Investment & Securities. He can be reached at pk.park@nhqv.com -- Ed.
We raise our TP on Celltrion to 240,000, as we hike our GPM forecast. Excluding compensation costs of W60bn for US Covid-19 test kits, 1Q23 GPM came to 54%, beating consensus. GPM normalization and FDA approval for Yuflyma are expected in May.
Excluding compensation costs for Covid-19 test kits, GPM normalizes at 54.2%
We maintain a Buy rating on Celltrion and raise our TP by 14% to W240,000, as we hike 2024F GPM (+1.8%p) and OP to reflect full-fledged sales of high-margin Remsima SC.
Celltrion booked consolidated 1Q23 sales of W597.5bn (+12% y-y) and OP of W182.4bn (+41% y-y), meeting consensus. OP was adversely affected by one-off compensation costs of W60bn paid to subsidiary Celltrion Healthcare US, who sold test kits below purchase costs. Of note, the inventory has now been exhausted.
Excluding the W60bn in compensation costs, GPM came to 54.2%, returning to the level seen in 1H21, before test kit sales began, thanks to expanding sales of high-margin Remsima SC. While Remsima SC’s market share may decrease temporarily after 1Q23, we expect the overall Remsima market share in Europe to climb from 69.1% (SC 16%) in 1Q23 to 71% (SC 21%) in 4Q23. In other words, the annual sales portion for Remsima SC should increase. US approval for Remsima SC, which is expected in October, represents a key variable for profit margin recovery in 2024.
US approval decision for Yuflyma expected in May; other product application schedule full
The US approval decision date for Yuflyma is around May 30. Issues at the CMO site for finished drug manufacturing have been resolved. Aiming for resilient supply, FDA inspection was conducted on the Remsima SC formulation completion process at the company's Ochang plant. Production of future SC-type products will also be carried out at the Ochang plant. The firm plans to apply for approval for five additional products within 2023.