20170428-三星证券-RD_expectations_heightened_after_solid_1Q_13页_973kb

Hanmi Pharmaceutical (128940) 1Q Results and R&D Update Summary

Core Content

Hanmi Pharmaceutical reported its 1Q results, showing a surprising performance despite a decline in sales and net profit. The firm's operating profit rose significantly, driven by supergeneric sales growth, product mix improvements, and cost savings. The company also has a robust R&D pipeline with multiple drug candidates in various stages of clinical trials and pre-clinical research.

Key Financial Highlights

• Sales: KRW233.6 billion, down 8.9% y-y, but up 35.7% q-q.
• Operating Profit: KRW31.4 billion, up 39.0% y-y, beating the consensus by 175.1%.
• Pre-tax Profit: KRW29.2 billion, up 16.3% y-y, beating the consensus by 203.1%.
• Net Profit: KRW24.6 billion, down 39.9% y-y, but up 178.8% from the consensus.
• Operating Margin: Increased to 13.4% from 8.8%.
• R&D Expenses: KRW42.6 billion, which is 18.2% of total sales.
• Consolidated Market Cap: KRW3.3 trillion (USD2.9 billion).
• Current Price: KRW299,500.
• Target Price: KRW410,000, up 10.8% from the previous estimate.

R&D and Clinical Trials

Hanmi Pharmaceutical has five drug candidates in global clinical trials, with plans to begin trials for Efpeglenatide (Sanofi) and JNJ-64565111 (Johnson & Johnson) soon. Ten more candidates in pre-clinical trials are expected to enter clinical trials in the second half of the year. The company is actively pursuing out-licensing deals for several pipeline drugs, including HM95573 with Genentech and Orascovery with Athenex.

Revenue from Out-Licensing Deals

• HM71224: Upfront fee of KRW54.8 billion (2Q15) with Eli Lilly.
• HM61713: Upfront fee of KRW59.8 billion (3Q15) with Boehringer Ingelheim, with additional milestone fee of KRW17.1 billion (4Q15).
• HM12525A: Upfront fee of KRW121.6 billion (4Q15) with Janssen.
• Quantum Project: Upfront fee of KRW255.6 billion (4Q15) with Sanofi.
• HM95573: Upfront fee of KRW93.6 billion (4Q16) with Genentech.
• Quantum Project: Upfront fee of KRW63.9 billion (4Q16) with Sanofi, but returned.

Revisions to Full-Year Forecasts

• Sales: Revised down to KRW915.1 billion (2017E) from KRW922.4 billion (Old).
• Operating Profit: Revised up to KRW73.4 billion (2017E) from KRW43.5 billion (Old).
• Pre-tax Profit: Revised up to KRW69.3 billion (2017E) from KRW38.5 billion (Old).
• Net Profit: Revised up to KRW62.4 billion (2017E) from KRW34.6 billion (Old).

Valuation Summary

• P/E Ratio: 69.6 (2017E), down from 143.3 (2016).
• P/B Ratio: 4.7 (2017E), down from 5.1 (2016).
• EV/EBITDA: 29.8 (2017E), down from 52.1 (2016).
• EPS Growth: 105.9% y-y for 2017E.
• ROE: 7.0% (2017E), up from 3.5% (2016).
• Target Price: KRW410,000, reflecting strong earnings performance.

R&D Pipeline

Key Events and Ownership Structure

• Ownership: Hanmi Pharmaceutical holds a 58.3% float with 11,163,452 shares.
• Market Cap: KRW3.3 trillion (USD2.9 billion).
• Key Partners: Sanofi, Johnson & Johnson, Eli Lilly, Genentech, ZaiLab, Athenex, and others.
• Out-Licensing Deals: The company has several out-licensing agreements, including with Sanofi, Eli Lilly, and Genentech, for various drug candidates.

Analysts' Recommendations

• Target Price: KRW410,000, up 10.8% from the previous estimate.
• Recommendation: BUY (3.5 out of 5), with 4 BUY, 3 HOLD, 2 SELL, and 1 SELL★★★1.
• Analysts: Brian Lee and Wonyong Park from Samsung Securities.

Summary of Key Points

• Hanmi Pharmaceutical reported strong 1Q results with a significant increase in operating profit and net profit, despite declines in sales and net profit.
• The company is focusing on supergeneric sales and cost savings to improve its financial performance.
• Hanmi has a diverse R&D pipeline with multiple drug candidates in clinical trials and pre-clinical research.
• The firm is actively pursuing out-licensing deals for several of its pipeline drugs.
• Analysts have raised their target price and recommendation, indicating optimism about the company's future performance.