Daily Brief Health Care: Alfresa Holdings, SD Biosensor, Celltrion Inc and more

In today’s briefing:

JAPAN BUYBACKS – Alfresa (2784) Cheap Stock, Uncheapening, Goes Big
SD Biosensor: Further Share Price Decline Likely & Candidate for KOSPI 200 Exclusion in 2024
Celltrion Inc (068270 KS): Turning Bullish As Biosimilar Revenue Rebounds & US Launches Imminent

JAPAN BUYBACKS – Alfresa (2784) Cheap Stock, Uncheapening, Goes Big

Born of a merger between two not-very-well-known businesses 20 years ago, Alfresa Holdings (2784 JP) is still not very well known. It is in a boring, low-margin business.
The highest EBIT margin in the past two decades was…. 1.8%. ROE was in the 8-10% range for 2016-2020 but has since fallen below, as PBR has fallen below 1.0x.
Today, we got an amended Mid-Term Management Plan, a new dividend policy, and buyback of 10% of shares out based on last price. It’s worth looking in the details.

We discuss about the likely exclusion of SD Biosensor from KOSPI 200 in 2024, a big earnings miss in 1Q 2023, and higher probability of further share price decline.
SD Biosensor reported terrible earnings in 1Q 2023. It had sales of 182.4 billion won (down 86.9% YoY and 48% lower than consensus) in 1Q 2023.
Our core bearish case of SD Biosensor is that in most countries around the world, there is no longer any need to test millions of people for COVID-19.

Celltrion Inc (068270 KS) recorded double-digit revenue and operating profit growth in Q1. Biosimilars reported first-ever KRW400B+ quarterly revenue. Operating margin reached to 30.5% in 1Q23 from 24.3% in 1Q22.
Remsima SC sales (27% of revenue) resumed at full scale and rebounded to KRW100B quarterly revenue after a gap of ~2.5 years, driven by increasing market share in EU.
This year, Celltrion is expected to launch three products in the U.S.: Vegzelma (biosimilar bevacizumab), Yuflyma (biosimilar adalimumab), and a novel subcutaneous formulation of infliximab.

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