[Edaily Reporter Shin Ha-yeon ] On the 29th, SANGSANGINVESTMENT&SECURITIES assessed that while ST Pharm Co., Ltd.(237690)’s second-quarter earnings fell short of market expectations due to one-time costs, the growth of its core business remains robust. Although the target price was lowered from 220,000 won to 190,000 won to reflect adjustments to earnings estimates, the firm maintained its “Buy (BUY)” investment rating, citing the expansion of oligonucleotide (oligo) orders.
Lee Dal-mi, an analyst at SANGSANGINVESTMENT&SECURITIES, stated, “The cost ratio rose because fixed costs of approximately 4 to 5 billion won were recognized all at once for a single product due to a lengthy eight-month production process.” She added, “Excluding this, operating profit was in line with our estimates, and the weaker-than-expected results were due to one-time factors.”
ST Pharm Co., Ltd.’s second-quarter consolidated revenue reached 108.5 billion won, a 59.0% increase year-over-year, while operating profit rose 41.7% to 18.3 billion won. However, operating profit fell short of market consensus and brokerage estimates due to the impact of one-time costs.
Oligo sales rose 83.0% to 79.6 billion won, while small molecule sales surged 161.2% to 17.5 billion won, driving overall revenue growth.
The analyst stated, “The full-scale operation of the second large-scale Oligo production line will drive profit improvement,” adding, “Following eight new orders in the first half of the year, seven additional orders are expected in the second half, so the upward trend in orders is expected to continue.”
He continued, “As of the end of June, the order backlog stood at approximately 440 billion won, and since high-margin commercial-scale oligo new drug production accounts for about 80% of this, long-term profit improvement is certainly feasible.”
He also maintained a positive outlook on the company’s medium- to long-term growth potential. The analyst assessed, “Stable revenue generation from the increasing number of commercialized oligonucleotide new drugs, coupled with the high growth of the Chonbang industry driven by the expansion of mRNA therapeutics into chronic disease indications, is expected to continue,” adding, “The resulting increase in orders is also positive.”