Hanmi Pharmaceutical's Third-Quarter Profits Set to Miss Forecasts by 64%, Says Kiwoom Securities

Kiwoom Securities has maintained a Buy rating on Hanmi Pharmaceutical (KOSPI: 128940) with a target price of 710,000 won, even as it forecasts the drugmaker's third-quarter operating profit will fall 64% short of market consensus.

In a report published on the 14th, Kiwoom analyst Heo Hye-min estimated Hanmi's third-quarter revenue at 385.1bn won — up 6% year-on-year but down 18% from the previous quarter — and operating profit at 38.4bn won, a 30% year-on-year decline and a 71% sequential drop, implying an operating margin of just 10%. Both figures come in well below consensus estimates of 450.1bn won in revenue and 107.9bn won in operating profit, missing by 14% and 64% respectively.

A timing quirk, not a fundamental stumble

The principal cause of the shortfall is an accounting timing issue rather than any deterioration in the underlying business. On 24th August, Hanmi licensed its obesity drug candidate HM17321 (a UCN-2 analogue) to Genentech, a subsidiary of Roche, securing an upfront payment of $190m (approximately 255bn won). However, because the administrative procedures required in the United States were not completed until early October, the payment will be recognised in the fourth quarter rather than the third. Some analysts had already included this receipt in their third-quarter estimates, making a large gap between forecasts and reported results all but unavoidable.

A base-effect from the second quarter compounds the problem. In that period, Hanmi recorded a one-off upfront payment of $75m (roughly 112.9bn won) from Eli Lilly, relating to a licensing deal for sonepeglutide — a GLP-2 agonist for short-bowel syndrome — which caused operating profit to surge to 131.1bn won, more than 2.4 times the previous quarter's figure. The subsequent normalisation in the third quarter was therefore largely inevitable.

Newly consolidated costs add further pressure

The acquisition of Aptose Biosciences introduces an additional drag. Aptose, a biotech developing treatments for blood cancers, was acquired as part of Hanmi's strategy to broaden its oncology pipeline. Its annual research-and-development expenditure of roughly 16bn won will be consolidated into Hanmi's accounts for the first time from the third quarter, weighing on near-term profitability.

China subsidiary stabilising

Beijing Hanmi, the company's Chinese subsidiary, is showing tentative signs of recovery. Third-quarter revenue is estimated at 78.1bn won, down 15% year-on-year but up 29% sequentially — suggesting the business may have passed its trough. The unit continues to face headwinds from China's centralised volume-based procurement (VBP) scheme, which compresses prices on tendered drugs, but management has responded by targeting products outside the VBP system and strengthening its sales force. Full-year revenue for Beijing Hanmi is expected to fall 15% to 341bn won this year, compared with 401.5bn won in 2025, and further monitoring of the trend will be necessary.

Fourth quarter: a sharp recovery on the cards

The outlook for the fourth quarter is considerably brighter. The 255bn won Genentech upfront payment will be recognised then, and the domestic launch of an obesity treatment should provide additional momentum. Kiwoom projects fourth-quarter operating profit of 230.4bn won — up 177% year-on-year and implying a 37% operating margin. For 2026 as a whole, the broker forecasts operating profit of 453.6bn won, a 76% increase over the 257.8bn won expected for the current year.

A productive year for licensing deals

Hanmi has struck two significant out-licensing agreements in 2024. On 1st June it licensed sonepeglutide to Eli Lilly; on 24th August it licensed HM17321 to Genentech. Roche plans to develop HM17321 within its cardiovascular, renal and metabolic (CVRM) portfolio as a treatment for obesity and type-2 diabetes. The compound has attracted attention for its potential to sustain fat-mass reduction when used alongside semaglutide (the active ingredient in Ozempic and Saxenda). Kiwoom values the non-operating contribution of HM17321 to Hanmi at 1.72 trillion won.

MASH data: the pivotal near-term catalyst

The most significant uncertainty hanging over the stock concerns the MASH (metabolic dysfunction-associated steatohepatitis) pipeline. Efinopegdutide — a dual GLP-1/glucagon receptor agonist licensed to Merck — is the key asset to watch. Clinical progress data are expected to emerge either at Merck's earnings call on 5th November or at the American Association for the Study of Liver Diseases (AASLD) annual meeting, running from 5th to 9th November. Market anxiety over this trial has weighed on the share price, which has fallen 16% since the Eli Lilly licensing announcement on 1st June.

Valuation

Kiwoom trimmed its target price marginally, from 730,000 won to 710,000 won. Given the lumpy nature of licensing income expected in the fourth quarter, the broker applied a 2027 EBITDA multiple to its valuation, arriving at an enterprise value comprising 5.79 trillion won of operating value and 3.46 trillion won of pipeline value. At 453,000 won (as of 13th October), the current share price implies roughly 57% upside to the target — though that upside assumes significant clinical success across the pipeline.

What investors should watch

The third-quarter earnings miss is largely a known event and may already be priced in. Yet two risks bear watching. First, the anticipated fourth-quarter rebound rests heavily on non-recurring licensing income, making it an unreliable guide to the run-rate profitability of the business. Second, the value attributed to the pipeline is acutely sensitive to clinical outcomes, particularly in MASH. Beyond efinopegdutide, whether Hanmi can secure additional licensing deals for its obesity candidates HM15275 and HM500197 in the second half of the year will be another important factor shaping the share price trajectory.