Hanmi Pharm
The author is an analyst for NH Investment & Securities. He can be reached at pk.park@nhqv.com -- Ed.
Hanmi Pharm’s 2Q23 OP is to miss consensus due to R&D cost reflection in the quarter. Our annual R&D cost projection remains intact. Believing that concerns towards Saemaul Geumgo (bank) regarding the stake deal between La Defense (PEF) and Hanmi Science (holding company) are unrelated to Hanmi Pharm’s fundamentals, we see a dip buying opportunity.
2Q23 preview: Earnings to miss due to concentration of R&D expenses
We maintain a Buy rating and TP of W430,000 on Hanmi Pharm. An apparent lack of short-term momentum after the EASL conference, concerns towards 2Q23 R&D costs, and recent stock supply-demand issues have led to an accelerated share price decline in recent days.
Hanmi Pharm is forecast to log consolidated 2Q23 sales of W347.5bn (+9.6% y-y) and OP of W34.2bn (+8.4% y-y), with both figures to miss consensus amid a concentration of clinical cost execution for new pipelines. R&D expenses were likely incurred in 2Q23 for phase I CRO in relation to its anti-cancer drugs, including an EZH1/2 inhibitor (announced at 2023 AACR) and BH3120 bispecific antibody, and accelerated recruitment for US phase II on its NASH triple agonist.
On a non-consolidated basis, 2Q23 R&D expense ratio likely jumped temporarily to 15.8%, although the annual figure should remain at 13.9%, which is in line with our previous estimate. At Beijing Hanmi, 2Q23 sales growth is forecast at 13% y-y. This year, annual consolidated EBITDA should remain solid at W310bn.
Concerns unrelated to EV could create buying opportunities
Concerns over Saemaul Geumgo, a liquidity provider for La Defense PEF’s planned purchase of a stake in Hanmi Science, have also been reflected in Hanmi Pharm’s share price. La Defense plans to purchase an 11.8% stake in Hanmi Science from the owner family and receive W250bn of the W320bn required funds from Saemaul Geumgo. Though this issue is unrelated to Hanmi Pharm’s main business, investment sentiment has been affected, as the owner family plans to pay inheritance tax by using the capital raised from the stake disposal. Saemaul Geumgo remains strongly committed to completion of the deal, and we advise investors to keep a close eye on related progress. If the deal is completed successful, the share price correction stemming from concerns related to Saemaul Geumgo should offer a buying opportunity.
The company’s NASH dual agent, which has lost market attention after the EASL conference, has started phase IIb to: 1) assess any improvement in fibrosis as a secondary indicator; and 2) draw a comparison with semaglutide.