Growing Expectations for Samsung Biologics' Performance

[Asia Economy Reporter Oh Ju-yeon] KB Securities forecasted that Samsung Biologics' expected sales and operating profit for 2020 will increase by 66.3% and 610.3% year-on-year, reaching 992.5 billion KRW and 221.5 billion KRW, respectively. Accordingly, the investment opinion was maintained as 'Buy,' and the target stock price was raised by 25.0% from the previous level to 500,000 KRW.

Researcher Lee Tae-young explained, "2020 is a year without regular maintenance that occurs every two years, and the transfer of products between Plant 1 and Plant 2 has been completed, allowing substantial utilization of the production capacity held by each plant." He projected the average plant utilization rates for 2020 to be 60% for Plant 1, 82% for Plant 2, and 29% for Plant 3.

Additionally, Researcher Lee stated, "Bioepis secured an additional supply contract worth 444 billion KRW (including an advance payment of 120 billion KRW) with Biogen in November last year for biosimilars of Lucentis and Eylea." He added, "On November 20 of the same month, the application for U.S. approval of the Avastin biosimilar was submitted, and in December, the clinical trial for the Lucentis biosimilar was completed." He explained that recognition of advance payments and increased equity-method income due to sales expansion are expected.

He anticipated that the sales for the fourth quarter of last year would be 208.6 billion KRW and operating profit 46.4 billion KRW, meeting market expectations. Researcher Lee said, "The plant utilization rates for the third quarter were 50% for Plant 1, 70% for Plant 2, and below 20% for Plant 3. Compared to the second quarter (around 50%), the improved utilization rate of Plant 2 is expected to contribute to the expansion of operating profit."

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