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The delayed approval U.S. and EU approval for antiviral COVID-19 treatment Regkirona ― also known as Regdanvimab ― is seen as a negative factor for Celltrion’s stock price. Korea Times file |
Multiple challenges to affect pharmaceutical giant’s stock price
By Yi Whan-woo
Minority shareholders of Korean pharmaceutical giant Celltrion are asking the company to buy back its own shares, as investors have been continuing a massive sell-off campaign of group stocks due to persisting uncertainties regarding its corporate future.
Celltrion’s stock price recently plunged by nearly half after peaking last December. Celltrion has just begun responding to its shareholders over the alarming stock price movements, as the group said Tuesday it will review shareholders’ demands for the share buyback.
“The company’s top management and board of directors will review shareholders’ requests,” it said without elaborating further.
A group representing about 400,000 minority shareholders of Celltrion demanded a total of eight measures to be carried out by the firm’s management to secure their interests. Those shareholders, mostly retail investors, hold 64.29 percent of Celltrion’s 86.78 million shares.
Among the measures addressed were a buyback of 1 million shares, appointment of an outside director representing the minority shareholders as a board member, and consideration of quarterly dividends to prevent short-selling.
“We do not expect all eight measures to be accepted, but they should try as much as they can to placate our concerns,” the emergency group said.
Behind investors’ growing worries are the facts that analysts and industry officials remain doubtful over the possibility of the group’s key affiliates’ share prices bottoming out, pointing out their downfall is linked to multiple challenges faced by Celltrion.
Celltrion earlier remained confident that its possible COVID-19 treatment ― Regkirona ― could play an expanded role in terms of helping it get more traction especially in Southeast Asia. However, despite its earlier plan, shipments of Regkirona have been delayed to two key target markets ― the United States and Europe ― due to increased inventory costs.
Plus, investors have been turning their attention towards Molnupiravir, the world’s first oral antiviral pill for COVID-19 developed by Merck. This also chilled investors’ appetites for Celltrion, which can’t stand up to competition with Merck on multiple fronts.
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The progress of Celltrion’s three-way merger with its two holding companies ― Celltrion Pharma, and Celltrion Healthcare ― is being delayed, complicating its efforts to streamline its business structure to reduce costs and boost transparency.
Its estimated year-on-year earnings in the third quarter remain bleak, with its sales set to drop by 3.8 percent to 527.9 billion won ($449.2 million) and operating profit to slide by 11 percent to 218.3 billion won, according to financial market observer FnGuide.
After having the largest short balance among listed KOSPI stocks, Celltrion shares have become one of the prime targets for short-term profit takers amid the resumption of short-selling.
On Tuesday, Celltrion increased 0.49 percent to close at 206,500 won on the KOSPI, a slight recovery from Oct. 29 when it dipped below the symbolic 200,000 mark to 196,000 won, data from the Korea Exchange (KRX), the country’s top bourse market operator, showed.
No upbeat factors seen
“All these traits indicate one thing for sure, that more investors expect Celltrion’s stock price to continue its downward trend,” said an industry source familiar with the issue.
Lee Dong-gun, a senior analyst at Shinhan Investment, pointed out one of the prerequisites for Celltrion management to make a rebound in its stock prices is how to cut its warehouse costs. He pointed out that Celltrion Healthcare, which is responsible for distribution and marketing, had inventory assets worth 2.14 trillion won at the end of the second quarter. The assets includes unsold Regkirona worth 700 billion won.
Concerning quarterly earnings performance of Celltrion Healthcare during the July-September period, KTB Investment and Securities estimated year-on-year sales to drop by 2 percent to 454 billion won and year-on-year operating profit to fall by 39.7 percent to 77 billion won.
Shinyoung Securities expected its sales to rise year-on-year by 5 percent to 486.7 billion won, but year-on-year operating profit slid by 26 percent to 94.4 billion won.
“This downward trend in terms of earnings has been confirmed in the second quarter,” said another source, referring to a 10.2 percent fall in Celltrion’s year-on-year operating profit in the April-June period to 163.2 billion won. Back then, sales inched up 0.7 percent to 431.8 billion won.
Celltrion shareholders ask management for share buyback
Source: Buhay Kapa PH
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