[Click eStock] Jongkundang Earnings Concerns... Target Price Downgraded

Jongkundang announced fourth-quarter earnings lower than expected, leading to a decrease in the target stock price.

On the 3rd, Jongkundang reported fourth-quarter results with sales of 412.4 billion KRW, down 18% year-on-year, and operating profit of 7.8 billion KRW, a 93% decrease. Operating profit fell significantly below market expectations.

Accordingly, based on a 6-month forward enterprise value calculation, Kiwoom Securities lowered the target price from 130,000 KRW to 100,000 KRW. NH Investment & Securities also downgraded the target price from 130,000 KRW to 115,000 KRW.

Huh Hyemin, an analyst at Kiwoom Securities, analyzed, "After the termination of the sales contract for K-CAB (a treatment for gastroesophageal reflux disease and gastric ulcers), which had relatively high margins, the introduction of Godeks (a liver disease treatment) and Pexuclu (a treatment for gastroesophageal reflux disease) offset the sales decline, but it was insufficient to compensate for the decrease in profitability."

In fact, Jongkundang's cost ratio in the fourth quarter increased by 15 percentage points compared to the same period last year.

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