Dong Wha Pharm, launched in 1897 as Korea's oldest pharmaceutical company, runs its prescription drugs, health functional foods, and subsidiary medical-device and overseas businesses on the back of the stable cash flow from over-the-counter brands such as Gas Whamsu, Pancol, Fucidin, and Itch. Earnings were weak last year, but Q1 2026 operating profit recovered nearly fourfold, so a single quarter's net profit exceeded the entire prior year's net profit, and even in a year when profit fell sharply the company maintained a dividend of ₩65 per share (a payout ratio of about 20.7%). What stands out recently is that the more the earnings trend holds through the year, the more the asset undervaluation of a 0.36x P/B, a forward P/E low versus peers, and the cash flow of long-established consumer drugs come to the fore, but with a debt ratio of 169% and a current ratio of 107% leaving limited financial room, it is worth checking whether the earnings recovery eases the debt and interest burden.
At-a-glance assessment financial health · growth · profitability · valuation
- Operating profit barely covers the interest bill (interest coverage below 1x).
- Revenue rose 6.8% year over year, and the pace is slowing (3-year trend: rising).
- Most recent quarter (Q1 2026) revenue was 3.9% higher than a year earlier.
- ROE is 2.3% (controlling-interest basis). It is below the sector average.
- Operating margin is 0.1%.
- P/B is low versus peers too, so it looks cheap on an asset basis as well.
Ownership & governance As of 2020-12-31
Largest shareholder Yoon Do-joon 5.13% (individual)
Controlling bloc incl. related parties 33.66%
With the controlling bloc holding 34%, the ownership structure is stable.
🔎 In-depth analysis
- Dong Wha Pharm, launched in 1897 as Korea's oldest pharmaceutical company, has making and selling drugs as the essence of its business.
- Revenue falls into three broad streams.
- First, over-the-counter (OTC) drugs bought without a prescription at pharmacies and marts—including long-established flagship brands such as the digestive aid Gas Whamsu, the cold medicine Pancol, the wound ointment Fucidin, and the gum medicine Itch—which make up the largest share of total revenue.
- These everyday-life brands sell steadily regardless of the economy, creating stable cash flow.
- Second, ethical (ETC) drugs dispensed by hospital prescription and health functional foods such as Circulan.
- Third, business diversification through subsidiaries, as Medyssey, which makes spinal medical devices, and a Vietnamese subsidiary are added, steadily raising the non-pharma share of consolidated revenue.
- In other words, it is a structure in which 'expansion into medical devices and overseas' runs together on the base of 'the stable cash flow of long-established consumer drug brands.'
- The latest close is ₩4,970 and the market cap is ₩138.8 billion.
- The price sits below the 20-day moving average (₩5,074) and the 60-day line (₩5,592).
- Trading below both the short- and medium-term moving averages, the trend is on the subdued side.
- RSI (an indicator that gauges upward versus downward strength over the past 14 days on a 0–100 scale) is 40.3, a neutral level.
- The one-month change is -5.1%, the three-month change is -13.4%, and the position versus the 52-week high is -29.6%.
- Relative strength versus KOSPI is 10 (on a 1–99 scale, converted from returns against the index over the past year with more recent periods weighted more heavily; higher means stronger than the market).
- That places it in roughly the top 91% of all stocks by strength.
- Over the past three months it lagged the index by 31.2%.
- Chart interpretation is best done alongside trading volume and disclosure dates.
- The P/B (the share price divided by book net assets per share; at 1x the price equals book value) is 0.37x, so the stock trades at about one-third of the net assets the company holds—clearly cheap relative to assets.
- The P/E (how many times a year's earnings the share price is) is 15.66x on a prior-year confirmed-results (trailing) basis, but rather than being 'burdensome because it is high,' this figure looks large because last year's earnings temporarily fell to a trough, shrinking the denominator, so reading it as expensive as-is is a misunderstanding.
- In fact, the forward P/E that reflects the profit to be earned this year is actually low compared with peer pharmaceutical companies.
- That is, for an inflection stock whose earnings are returning to a normal track, forward rather than trailing is the real picture, and on a forward basis the company is cheap relative to earnings as well.
- ROE (how much is earned in a year on equity) was low at 2.3% on a prior-year basis, but this too is an afterimage of the earnings weakness and will rise as profit recovers.
- The debt ratio (debt against equity) of 169% is an item to check, and the current ratio of 107% is on the tight side.
- In sum, this is a company with thick asset value where profit revives this year and undervaluation signals appear on both the asset and earnings sides, with debt and liquidity management the points to view alongside.
- Revenue rose steadily over five years from ₩293.0 billion to ₩496.3 billion (about 14% per year on average), so top-line growth is intact.
- Profit has had its ups and downs.
- Operating profit fell from ₩29.9 billion in 2022 to ₩18.8 billion in 2023 and ₩13.4 billion in 2024, then sank sharply for the year to ₩260 million in 2025 as rising costs and one-off burdens overlapped.
- Then in Q1 2026 operating profit jumped to ₩11.2 billion, about fourfold (+394.8%) year on year, producing net profit of ₩9.65 billion in a single quarter—exceeding the entire prior-year net profit of ₩8.69 billion.
- This recovery reads not as a chance flash but as the original earnings power revealing itself as the one-off costs that weighed on last year lifted, on top of a top line that has grown at a double-digit pace each year.
- Because the revenue base of steadily selling consumer drugs like Whamsu and Pancol has never wavered, the Q1 profit scale is natural to view as the starting point of a normalized year rather than an unreasonable assumption.
- This is exactly where the basis for this year's forecast profit lies.
- That said, quarterly profit can swing, so it is enough to confirm through quarterly results whether the normal earnings trend continues through the year.
- Recent disclosures center on periodic reporting, governance, and shareholder returns.
- In May 2026 the Q1 report was filed, confirming in figures the large recovery in operating profit, and in March the 2025 business report and audit report were released, formalizing the substance of last year's earnings weakness and setting the comparison baseline that separates this year's normalization.
- At the March annual general meeting, the company maintained a dividend of ₩65 per share (a payout ratio of about 20.7%) even in a year when profit fell sharply, continuing its shareholder-return stance, and in June a corporate governance report was disclosed.
- Rather than momentum-type disclosures such as a large single contract, this is a phase in which 'substance'-oriented disclosures—the earnings inflection and shareholder returns and governance—continue.
- This stock's strengths are clear.
- First, undervaluation relative to assets.
- A P/B of 0.36x is one-third of net assets, so the floor on the asset-value side is thick.
- Second, profit has revived.
- Operating profit that had nearly disappeared last year recovered nearly fourfold in Q1 this year, so a single quarter's net profit exceeded the entire prior-year net profit, and as a result the forward P/E reflecting this year's profit is low versus peers, making it cheap relative to earnings as well.
- Third, a business structure that adds medical devices and overseas on top of the stable cash flow of long-established consumer drugs such as Whamsu, Pancol, and Fucidin.
- The point to view alongside is the debt ratio of 169% and a tight current ratio of 107%; financial room is not ample, so it helps to check whether the earnings recovery eases the debt and interest burden.
- In sum, this is a stock with clear appeal on both the value and results sides—cheap on assets and with profit back on a normal track—and its appeal grows clearer the more the earnings trend holds through the year.
🔎 Valuation vs peers Inconclusive
A comparison centered on domestic small- and mid-cap traditional pharmaceutical companies with large OTC and ETC shares and similar market caps (JW Pharmaceutical, Daewon Pharmaceutical, Bukwang Pharmaceutical), though the degree of business diversification (medical devices, overseas) differs by company, so a simple P/E comparison has limits.
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| JW Pharmaceutical | 8.97x | 1.49x | 16.65% |
| Daewon Pharmaceutical | 0.00x | 0.67x | -0.52% |
| Bukwang Pharmaceutical | 30.56x | 1.13x | 3.69% |
A P/B of 0.38x is the lowest among the peer set, a clear discount to net assets. That said, with ROE at 2.3%, it looks 'cheap but not putting capital to good use,' so it is hard to declare undervaluation from asset value alone. The key variable is profit. Last year's operating profit collapsed to ₩260 million, inflating the trailing P/E to 16.69x, but Q1 operating profit recovered nearly fourfold, so if this year's profit normalizes, the burden relative to earnings falls sharply. In other words, the asset side is clearly cheap while the earnings side hinges on a recovery assumption, so until the durability of the recovery is confirmed, it is reasonable to hold judgment rather than declare undervalued or fairly valued.
Price history Close · MA20 · MA60
The latest close is ₩4,970 and the market capitalization is ₩138.8 billion. The price sits below its 20-day moving average (₩5,074) and below its 60-day moving average (₩5,592). It is under both its short- and medium-term moving averages, so the trend looks subdued. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 40.3, a neutral level. The one-month change is -5.1%, the three-month change is -13.4%, and the position relative to the 52-week high is -29.6%. Relative strength versus the KOSPI is 10 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 9% of all stocks. Over the past three months it lagged the index by 31.2%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M -31.23% / 6M -49.68% / 12M -69.44%
Key metrics vs sector median
Valuation
The P/E is 15.98x. The P/B of 0.37x is below the sector median (1.37x). That said, this P/E is based on last year's (trailing) results. With recent quarterly earnings up sharply, the trailing P/E can look higher than it really is, so a precise read is best done on this year's expected (forward) earnings.
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate)
DCF (discounted cash flow) estimate — discount rate 11.6%, initial growth 4.0%→terminal 2.0%, 10-yr forecast, earnings-based. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is 2.3%, below the sector average (3.0%). The operating margin is 0.1%. The debt ratio is 169.2%, so the financial structure is moderate.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $239.3M | $308.1M | $329.0M | +6.78% ↓ slower |
| Operating profit | $12.4M | $8.9M | $170,169 | -98.09% ↓ slower |
| Net profit | $18.2M | $3.7M | $5.8M | +56.13% ↑ faster |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $194.2M | $225.6M | $239.3M | $308.1M | $329.0M |
| Operating profit | $14.9M | $19.8M | $12.4M | $8.9M | $170,169 |
| Net profit | $11.8M | $13.5M | $18.2M | $3.7M | $5.8M |
| Revenue CAGR | 4-yr avg 14.09% | ||||
Revenue rose 6.8% year over year (2023 ₩361.1 billion → 2024 ₩464.9 billion → 2025 ₩496.4 billion), and the three-year trend is 'rising'. That said, the pace of growth slowed from the prior year. Operating profit fell 98.1% year over year. The decline widened. Over the 5 years on record, revenue compound annual growth (CAGR) is 14.1%. The two-year revenue CAGR is 17.2%. In the most recent quarter (Q1 2026), revenue was 3.9% higher than the same period a year earlier.
Latest quarterly results Q1 2026 · vs year-ago
Technical indicators
What stands out
- P/E and P/B are both low versus peers, so the price looks inexpensive relative to earnings and assets.
Points to watch
- Revenue rose 6.8% year over year, and the pace is slowing (3-year trend: rising).
Recent news & events searched · sourced
- 2026-05-15EarningsQ1 2026 report filed. Revenue ₩130.6 billion (+3.9% YoY), operating profit ₩11.2 billion recovering about fourfold (+394.8%) year on year, net profit ₩9.65 billion.Operating profit that had nearly vanished last year exceeded the entire prior-year net profit in a single quarter, raising the possibility of an earnings inflection. Whether the recovery holds through the year is the medium-term point to watch. Source
- 2026-03-18Filing2025 business report and audit report filed. Despite revenue of ₩496.3 billion (+6.8%), operating profit plunged to ₩260 million, formally confirming the profitability weakness.A year in which profit collapsed against top-line growth was confirmed, distorting the prior-year P/E metric. It is the comparison baseline that separates this year's normalization. Source
- 2026-03-26DividendAt the annual general meeting, a cash dividend of ₩65 per share (dividend yield about 1.25%, payout ratio about 20.7%) and director-appointment agendas were processed.The dividend was maintained even in a year when profit fell sharply, continuing the shareholder-return stance. There is potential for expanded capacity for returns if profit recovers. Source
- 2026-06-01FilingCorporate governance report disclosed. Board operation, shareholder rights, and other governance status disclosed.Not a momentum issue, but as material for checking governance transparency it ties to medium- to long-term credibility. Source
Figure cross-check computed ↔ external
Recent filings
- 2026-06-01Corporate governance report
- 2026-05-15PeriodicQuarterly report
- 2026-04-29Disclosure
- 2026-03-26Shareholders' meeting notice
- 2026-03-26Disclosure
- 2026-03-18PeriodicAnnual business report
- 2026-03-18Audit report
- 2026-03-11Disclosure
- 2026-03-11Amended filing
- 2026-03-11Shareholders' meeting notice
- 2026-03-10Amended filing
- 2026-03-09OwnershipLargest-shareholder ownership change report
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
Bong Stocks presents public-data-based information for reference only. It is not investment advice and contains no target prices, ratings, or buy/sell recommendations. Verify independently before making any decision.