On the 4th, Korea Investment & Securities maintained a 'Buy' rating on Samsung Biologics, expecting solid growth this year compared to competitors, supported by improvements in the contract development organization (CDO) market. The target price was also maintained at 1.25 million KRW.
According to Korea Investment & Securities, Samsung Biologics' consolidated sales for Q4 last year are estimated at 1.0483 trillion KRW, with an operating profit of 314.5 billion KRW. The contract development and manufacturing organization (CDMO) division's sales are projected at 843.4 billion KRW. Researcher Wi Haeju from Korea Investment & Securities analyzed, "With full operation of existing plants and additional sales from part of the 4th plant, solid performance growth is expected compared to the previous year's high base affected by the USD-KRW exchange rate."
The researcher forecasted that operating profit growth, which slowed to 9.6% last year, will rebound to 22% this year. He stated, "Thanks to order contracts amounting to 2.7 billion USD in 2023, it is estimated that all volumes including the 4th plant have been secured," adding, "Therefore, Samsung Biologics is expected to continue exceptional growth compared to competitors." This is because it mainly produces commercial antibodies for big pharma, resulting in very low earnings volatility and uncertainty.
He also viewed that the increase in new drug clinical development will lead to improvements in the CDO market. The researcher said, "Beyond the big antibody-drug conjugate (ADC) deals by big pharma in 2023, antibody?molecular conjugates are now gaining attention," adding, "These efforts will eventually be developed into late-stage commercialization pipelines, contributing to the growth of the antibody market."
Furthermore, he added that as new drug clinical development becomes more active, Samsung Biologics could benefit from increased CDO order intake.
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