2022 Forecast: Double-digit Growth for Revenue, OP
The author is an analyst of KB Securities. He can be reached at kimtaehee@kbfg.com. -- Ed.
Maintain BUY but lower target price to KRW230,000
We lower our TP for Celltrion from KRW280,000 to KRW230,000, as we revise down 2022E/2023E OP by 10.9%/9.7% to reflect changes to WACC (8.08%→8.11%), risk-free rate (1.02%→1.29%) and market risk premium (7.36%→7.16%). Also, we expect profitability to fall as low-margin diagnostic kits increase their revenue proportion. However, we maintain BUY, as Inflectra’s U.S. market share has continued to rise, Yuflyma and Remsima SC performance in Europe has been robust and the company has been securing long-term growth potential through biosimilars (e.g., Avastin, Stelara, Eylea).
Robust profitability despite market increase in revenue from low-margin diagnostic kits
Celltrion posted 4Q21 consolidated revenue/OP of KRW601.1bn (+20.5% YoY)/KRW219.0bn (+32.9% YoY), missing the market consensus. Revenue hit an all-time quarterly high, surpassing the KRW600bn mark for the first time. Remsima IV accounts for 18% of overall revenue, followed by Regkirona at 17%, pharmaceuticals+chemicals at 17%, diagnostic kits at 14%, Herzuma at 8%, Yuflyma at 7% and Teva Pharmaceuticals-bound CMOs at 6%/Truxima at 3%. Despite a marked increase in revenue from low-margin diagnostic kits, OPM reached 36.4%, supported by increases in revenue from high-margin U.S.-bound Inflectra and in-house developed new drug Regkirona.
2022 forecast: Double-digit growth for both revenue, OP
For 2022, we forecast revenue/OP at KRW2.22tn (+17.5% YoY)/KRW852.8bn (13.1% YoY). We see Yuflyma and Remsima SC gaining solid footing in the market and diagnostic kits generating revenue of ~KRW460.0bn by Apr 30. While greater revenue exposure to diagnostic kits should slightly reduce profitability, margins should remain solid at ~35%.