[Click e-Stock] GC Pharma Maintains Target Price and Buy Rating Despite 'Earnings Shock'

Sangsangin Securities: "Performance Expected to Improve in the Second Half"

Sangsangin Securities stated on August 4th that GC Pharma, a pharmaceutical company specializing in blood products and vaccines, saw weak performance in the second quarter due to the timing of revenue recognition being postponed to the second half of the year. The firm maintained its target price at 180,000 won and its "buy" rating, noting a potential upside of 58.9% compared to the closing price of 113,300 won on August 3rd.

GC Pharma's sales in the second quarter of 2026 recorded 421.2 billion won, a decrease of 15.8% year-on-year, while operating profit plunged by 93.8% to 1.7 billion won. This figure is 64.6% below the Sangsangin Securities estimate of 4.8 billion won.

Lee Dal-mi, a researcher at Sangsangin Securities, cited three reasons for GC Pharma's weak performance. ▲ First, approximately 10 billion won in revenue from Aliglo, a blood product sold in the United States, was pushed back. ▲ Second, about 20 billion won in bulk sales of influenza vaccine that should have been recognized in the second quarter were deferred to the third quarter. ▲ Third, orders for Hunterase, a treatment for rare diseases, became concentrated in the fourth quarter, resulting in fewer orders in the second quarter. As a result, products with higher profit margins were excluded from the revenue mix, causing the cost of sales ratio to rise by 5 percentage points compared to last year, and R&D expenses also increased by about 5 billion won quarter-on-quarter.

Conversely, this means that performance in the second half is expected to improve significantly, according to Lee. She projects GC Pharma's operating profit for the third quarter to reach 35.2 billion won, up 20.5% year-on-year. This is due to results that should have been recognized in the second quarter instead being deferred to the third and fourth quarters. In addition, an upfront payment of 260 billion won received in early July from the sale of a 20% stake in subsidiary Curevo, which is developing a shingles vaccine, to US-based Eli Lilly in May, is expected to boost non-operating income.

Reflecting this earnings announcement, operating profit estimates for 2026 and 2027 were adjusted by -1.5% and +1.0%, respectively. Earnings per share (EPS) for both years rose by 2.2%. As the adjustments were relatively minor, the investment opinion and target price remain unchanged.

The proceeds from the Curevo sale are expected to be used for growth investments. GC Pharma plans to invest 140 billion won in its Ochang plant in North Chungcheong Province to add a new production line for subcutaneous immunoglobulin (SCIG) injection. Lee noted that long-term growth is expected, considering ▲ the development and expansion of SC formulations and production lines for Aliglo ▲ anticipated long-term annual sales of more than 1.5 billion dollars after the expansion ▲ plans to submit an IND (Investigational New Drug) application for phase 3 clinical trials in 2027 and target commercialization by 2030.

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