Hanmi Pharmaceutical is experiencing a decline in its stock price due to poor performance from its Chinese subsidiary.
As of 2:02 PM on July 29, Hanmi Pharmaceutical's shares were trading at 310,000 won, down 64,500 won (17.22%) from the previous trading day. Earlier in the session, the stock fell more than 19%, reaching a low of 302,000 won.
On the previous day, Hanmi Pharmaceutical announced its earnings, which revealed disappointing results from its Beijing Hanmi subsidiary, contributing to a decline in investor sentiment.
According to the announcement, Hanmi Pharmaceutical reported consolidated revenue of 467.2 billion won and an operating profit of 131.1 billion won for the second quarter of this year. Revenue increased by 29.3% compared to the same period last year, while operating profit surged by 116.9% during the same timeframe.
In contrast, the Beijing Hanmi subsidiary reported revenue of 60.7 billion won and an operating profit of 600 million won. This represents a 29.9% decrease in revenue and a staggering 96.6% drop in operating profit compared to the previous year. The decline is attributed to reduced sales of key products due to China's centralized purchasing system and ongoing fixed cost burdens.
In light of Beijing Hanmi's poor performance, analysts have been lowering their target prices for Hanmi Pharmaceutical. Kim Jun-young, a researcher at Meritz Securities, stated, "The underperformance of Beijing Hanmi has overshadowed the value of technology transfers. Given the ongoing price reduction policies in China, it will take time to recover to previous levels of profitability."
Kim Seung-min, a researcher at Mirae Asset Securities, also adjusted the target price for Hanmi Pharmaceutical from 700,000 won to 640,000 won, reflecting the negative impact of the centralized purchasing system on Beijing Hanmi's performance.
* This article has been translated by AI.
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