Hanmi Pharmaceutical(128940) announced second-quarter results that beat market expectations, but the stock is weakening early in the session as brokerages lower their target prices one after another, citing weak results at the China subsidiary.
As of 9:48 a.m. on the 29th, Hanmi Pharmaceutical was trading at 322,000 won on the Korea Exchange, down 52,500 won (14.02%) from the previous session.
Hanmi Pharmaceutical disclosed the previous day that, on a consolidation basis, second-quarter revenue came to 467.2 billion won and operating profit to 131.1 billion won this year. The figures, up 29.3% and 116.9% from a year earlier, far exceeded market expectations.
However, weakness at the local China subsidiary, Beijing Hanmi Pharmaceutical, weighed on investor sentiment. Beijing Hanmi's second-quarter operating profit was 600 million won, down 96.6% from a year earlier. The company said seasonality and the volume-based procurement scheme in China caused the weak results.
Meritz Securities lowered its target price to 630,000 won from 690,000 won, saying the recovery pace of the China business will be slower than expected.
Kim Jun-young, an analyst at Meritz Securities, said, "The company expects a gradual recovery in the second half by expanding the market share of winning items and fostering non-centralized procurement items, but as China's drug price cuts continue, it will take time to recover profitability to past levels."
However, "with the domestic launch of Efpeglenatide in the second half, Hanmi Pharmaceutical's obesity treatment business is expected to enter a full-fledged commercialization phase," adding, "Along with the domestic launch of a GLP-1 new drug in the second half, it is necessary to watch the clinical momentum."
NH Investment & Securities also set its target price at 570,000 won, down 18.6% from before.
In contrast, some securities firms kept their target prices, emphasizing long-term growth potential.
Jung Jae-won, an analyst at iM Securities, said, "Operating profit far exceeded the market consensus of 69.8 billion won," and added, "Despite concerns about subsidiary results, considering overwhelming R&D competitiveness and the value of the obesity treatment pipeline, there is considerable upside among legacy pharmaceutical companies." The target price was kept at 600,000 won.