Samsung Biologics, Full-Scale Earnings Growth Expected from Q4

[Asia Economy Reporter Song Hwajeong] Samsung Biologics recorded solid results in the third quarter of this year, and it is expected that substantial performance growth will begin from the fourth quarter.

According to the Financial Supervisory Service's electronic disclosure system on the 24th, Samsung Biologics posted sales of 274.6 billion KRW and an operating profit of 56.5 billion KRW in the third quarter. These figures represent increases of 49% and 139%, respectively, compared to the same period last year.

Sales exceeded consensus estimates by 12.1%, but operating profit fell short by 12.2%. Researcher Kim Jiha from Meritz Securities analyzed, "Sales surpassed expectations due to a slight improvement in the utilization rate of Plant 3, but operating profit fell short of consensus due to increased staffing and commission payments related to the expansion of Plant 4."

It is anticipated that substantial performance growth will be possible starting from the fourth quarter. Researcher Kim said, "Fourth-quarter sales are expected to increase by 7.4% from the previous quarter to 294.9 billion KRW, and operating profit is expected to rise by 22.7% to 69.3 billion KRW," adding, "This is because the effect of the surge in contract manufacturing organization (CMO) orders in the second quarter will begin to appear in earnest from the fourth quarter."

The groundbreaking of Plant 4 is also expected to highlight mid- to long-term growth potential. Researcher Lee Donggeon from Shinhan Financial Investment stated, "As announced on August 11, the groundbreaking of Plant 4, with a capacity of 256,000 liters, is scheduled to take place within this year. Since this plant will combine large-scale and small-scale production facilities, higher unit sales per plant compared to Plant 3 are expected." Along with this, changes in maintenance plans are also analyzed as factors emphasizing mid- to long-term growth potential. The government is pushing to extend the bio-plant pressure vessel opening inspection, which was previously conducted every two years, to every four years. This is expected to affect the regular maintenance schedule of Plant 2 planned for 2021. Researcher Lee said, "The regular maintenance schedule for Plant 2 will be postponed to 2022, and the regular maintenance for Plants 1 and 3, originally planned for 2022, will be delayed to 2024," adding, "As a result, Samsung Biologics' quarterly performance volatility will decrease, and its performance attractiveness from a mid- to long-term perspective will increase."