Korea Healthcare: Revisiting our thesis following the rally today

研报英文原文证据摘录

Korea Healthcare: Revisiting our thesis following the rally today

ssions with a CDMO expert, we have also been able to

confirm that the labour disputes have not led to a change in industry dynamics (e.g.

order migration) given high CDMO switching costs. Hence we do not view the labour

disputes as a reason to be less positive on the stock, though we do expect investors to

remain cautious until an agreement is finalised due to: 1) higher labour costs (hence

lower margins) and 2) potential one-off costs (from either batch discards or provisions) in

upcoming quarters. Slower-than-expected capex announcements or order wins also still

seem to have some investors concerned as of yet. Valuations have fallen to 35x 2026E PE

(below -1SD, though still at a premium vs global CDMO peers).

Alteogen (Sell): Monetisation still slow; BD momentum amid policy risks

Year to date, Alteogen's 2026/27F revenue consensus estimates (per Bloomberg) have

seen downward revisions of 16/26% while OP consensus has also fallen 23/26% on

slower-than-expected monetisation from Merck's Keytruda SC. Whilst we note

Keytruda's conversion in the US has been trending up following the J-code issuance, we

remain unconvinced that this is the end of the downward earnings revision cycle. We

think Q2 will be a pivotal quarter where we may be able to test this as we gain more

clarity on the milestone thresholds and the payout ratio. Separately, we believe the

recent IRA proposal revisiting the fixed-combination drug policy poses a risk for

Alteogen as it may potentially open SC formulation drugs as also eligible for IRA price

cuts alongside IV. We also note there may be some investors looking to trade the stock

on BD momentum with Alteogen's CEO having commented today that a deal may be

coming soon.