Pharmaceutical stocks gain on increased demand for cold medicines

Suspen 8-hour tablets [Source : Hanmi Pharmaceutical]

Pharmaceutical stocks in South Korea have garnered interest from investors after local health authorities issued emergency order to produce more common cold medicines this winter to cope with increased demand amid a spike in Covid-19 infections and panic-buying in China after lockdown lift.

Six pharmaceutical stocks are expected to report gains in their net income grow in the fourth quarter, according to an analysis by Maeil Business Newspaper and financial data firm FnGuide. On the back of the strong earnings estimates, they are expected to pay handsome dividends this year, leading foreign investors gobble up their shares since October.

Hanmi Pharmaceutical made its name as top pharmaceutical company projected to report biggest growth in fourth-quarter net profit from a year ago based on estimates compiled by three or more brokerage houses.

Hanmi Pharmaceutical is projected to raise 33 billion won ($25.4 million) in net income in the October-December period, up 50.9 percent from the same period a year ago. Its Suspen 8-hour tablets have been included as one of the medicines the Korean government ordered urgently to produce more to treat cold and flu. Local health authorities last week asked the company to boost production until end of April in return for the government raising the price of the pills that will be covered by national health insurance.

Hanmi Pharmaceutical’s expected dividend yield ratio is 0.17 percent for this year. Foreign investors have net purchased 44 billion won worth Hanmi Pharmaceutical shares in the fourth quarter when its shares have gained 27 percent.

ColdaeWon S [Source : Daewon Pharmaceutical]

Along with Hanmi Pharmaceutical, Daewon Pharmaceutical is also in the limelight amid panic-buying of cold medicines in China. Its ColdaeWon S cold medicine brand has proved popular at home and abroad. To deal with growing demand, the company released its new version, ColdaeWon Q, after adjustment in ingredients and contents in the second quarter.

Daewon Pharmaceutical’s net profit is projected to jump 46.6 percent on year to 8.2 billion won in the October-December period. Net income growth leads to more dividend payments as it is the base to various research and development investment and dividends.

Daewon Pharmaceutical’s dividend yield rate is 1.02 percent, becoming the only of the six firms with over 1 percent rate. Foreigners have net bought 10.2 billion won in shares that have soared 33 percent in the final quarter so far.

ST Pharm, a Covid-19-related stock, is on a rise after studies in the United States showed that messenger ribonucleic acid (mRNA) therapy is effective in cancer treatment. ST Pharm owns key mRNA platform patents.

ST Pharm, although a late comer in the global industry, will be able to join hands with American drug makers in mRNA sector, according to Samsung Securities. The company is forecast to swing to profit in the fourth quarter. Foreigners net purchased 16.8 billion won in ST Pharm shares in the fourth quarter.

Foreign investors’ appetite for Celltrion shares has revived, too. They net purchased 50.3 billion won worth Celltrion shares in the fourth quarter. The company’s revenue, however, has grown only 0.8 percent, relatively lower than other pharmaceutical firms as its treatments mainly focus on chronic patients instead of Covid-19 treatments.