[Click eStock] "No Surprises in Strong Performance... Samba Maintains Target Price at 1 Million Won"

On the 25th, Samsung Securities maintained a buy rating and a target price of 1 million KRW for Samsung Biologics, stating that it is recording solid earnings without any surprises.

Seogeunhee, a researcher at Samsung Securities, said, "We confirmed steady earnings growth in the first quarter and expect the annual earnings guidance for 2024 to be revised upward due to the favorable won-dollar exchange rate."

Researcher Seo added, "Long-term benefits for Samsung Biologics are expected due to U.S. sanctions on Chinese biotech companies."

On a consolidated basis for the first quarter, Samsung Biologics achieved sales of 946.9 billion KRW, operating profit of 221.3 billion KRW, and net income attributable to controlling shareholders of 179.4 billion KRW. Sales grew due to full operation of plants 1-3 and increased utilization rate of 60,000 liters at plant 4; however, operating profit was 38.1 billion KRW due to increased selling and administrative expenses from hiring new personnel, higher fixed costs at plant 4, and expansion of sales regions and products for Samsung Bioepis biosimilars, which recorded sales of 280.1 billion KRW.

On a consolidated basis, sales are expected to reach 4.2124 trillion KRW, operating profit 1.2458 trillion KRW, and operating margin 29.6%. Earnings growth is anticipated from full operation of plants 1-3 and increased utilization rate of 180,000 liters at plant 4. With continuous orders from multiple global pharmaceutical companies, cumulative orders in the first quarter reached 12.5 billion USD. Samsung Bioepis is also expected to contribute to profitability improvement through milestone receipts from new biosimilar launches.

The target price based on DCF valuation was maintained. The U.S. Biosecurity Act, which aims to counter China, has passed the Senate committee and is expected to be voted on by the Senate soon. Although the likelihood of existing customers of Wuxi AppTec switching to other CDMO companies is low due to this law, new customers are more likely to choose CDMO companies other than Chinese firms. Samsung Biologics recently mentioned that inquiries for such orders have been increasing. Improvements in antibody drug production yields have reduced the need for global pharmaceutical companies to produce large volumes in-house. The recent sale of Roche’s antibody drug factory confirmed changes in global pharmaceutical companies’ production strategies. Demand for antibody drug CMO is expected to continue.