[Click e Stock] "Chong Kun Dang, R&D Momentum Requires More Patience... Target Price Lowered"

On July 21, iM Securities lowered its target price for Chong Kun Dang from 120,000 won to 90,000 won. The company cited two reasons: second-quarter operating profit is expected to fall short of market consensus, and momentum in research and development (R&D) will require a longer wait.

Jung Jae-won, a researcher at iM Securities, stated in a report published on the same day, "While sales of newly introduced products such as Wegovy, Godex, and Fexuclu continue to grow steadily, the top line is expanding but operating profit is declining due to a rising cost of goods sold ratio."

Chong Kun Dang's standalone sales for the second quarter are estimated at 483.9 billion won, with operating profit expected to reach 19.3 billion won. Compared to the previous year, sales are projected to grow by 13%, while operating profit is expected to decrease by 13%. In particular, operating profit is anticipated to miss consensus forecasts. On a full-year basis, Chong Kun Dang's operating profit is projected to be 79.5 billion won, representing a 1% decrease from the previous year.

In addition, analysts suggest that it is still difficult to expect significant R&D momentum in the near term. Researcher Jung explained, "The company is spending over 150 billion won annually on research and development; however, in terms of R&D momentum, meaningful data updates from major pipelines are only expected next year. A conservative approach is warranted."

Accordingly, iM Securities maintained its investment rating on Chong Kun Dang, while cutting the target price to 90,000 won. The previous day, Chong Kun Dang closed at 66,700 won per share in the regular session.

Jung noted, "Until an update on the results of the phase 2 clinical trial for CKD-510 is released, it will be difficult for R&D momentum to significantly affect the company's corporate value, which will in turn limit short-term share price increases. As seen in November 2023, when the stock surged following the announcement of milestone payments for research and development through a technology transfer agreement, whether events that could enhance the value of the new drug pipeline occur will be an important factor in the company's share price trajectory."

This content was produced with the assistance of AI translation services.