South Korea’s Dong-A Socio Holdings Co. recorded best-ever sales in the second quarter this year thanks to an impressive performance of its active pharmaceutical ingredients (APIs) manufacturing unit ST Pharm Co. Solid performance of its affiliates and eased concerns over the upcoming shift to a holding company will likely keep earnings strong for the remainder of the year.

Dong-A Socio Holdings reported 40.8 billion won ($37.4 million) in operating profit for the April to June period this year on a consolidated basis, up a whopping 137.4 percent on year. Sales also jumped 30.7 percent on year to an all-time high of 235.2 billion won, and operating profit margin reached a record-high of 17.3 percent. According to the market estimation, its operating profit for this year would amount to 100 billion won and sales 800 billion won.

Such robust earnings of the healthcare company producing drugs, health drinks and biosimilars through its units were mainly attributed to the stellar performance of ST Parm, API manufacturing arm. ST Pharm’s export of APIs for hepatitis C treatment surged 342.2 percent on year to 59.9 billion won in the second quarter. Outlook for the company in the latter half are also bright as it is set to provide its products to more countries and launch novel compounds.

“Earnings of its affiliates such as ST Pharm, Dang-A Pharmaceutical Co. and Yongma Logis Co. have all been on the rise,” said Kim Tae-hui from Hyundai Securities Co. “Dong-A Socio Holdings is a sound health care company with a diversified business portfolio encompassing prescription medicines, over-the-counter drugs, biosimilar drugs and APIs.” Hyundai Securities has recently revised upward its target stock price for the company from 210,000 won to 223,000 won.

Its share prices in the first half were weighed down by lingering uncertainties over the transition into a holding company. To be a holding company in Korea, a company has to hold more than 20 percent stake in listed affiliates and 40 percent stake in non-listed affiliates, but Dong-A Socio Holdings failed to meet the requirements. It has total 22 affiliates including Kospi-listed Dong-A ST Co. and Kosdaq-listed ST Pharm, as well as non-listed Dong-A Pharmaceutical, DM Bio, Soo Seok Co. and Yongma Logis.

The company, however, announced on August 23 that it planned a rights offering through a share swap deal to acquire shares of ST Pharm, a move that will help it meet the requirements to shift to a holding company by October.

Its cash-cow product Bacchus, a non-carbonated energy drink accounting for 26 percent of its entire sales, also recorded 103.4 billion won in sales in the first half this year. Its sales have steadily grown more than 10 percent every year since 2013 when it was 179.2 billion won, 186.5 billion won in 2014 and 200.9 billion won in 2015. Its sales are forecast to exceed 200 billion won this year.

Dong-A Socio Holdings stocks closed down 3,000 won, or 1.7 percent, at 173,000 won in Seoul trading on Wednesday.

Its largest shareholder is the country’s biggest institutional investor National Pension Service holding a 13.61 percent stake and the second largest is its vice chairman Kang Jung-seok who owns 11.60 percent stake.

By Park Yun-gu

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]