[Click eStock] "Samsung Biologics, Disappointing 3Q... Earnings Growth from 4Q"

3Q Earnings Increased Year-on-Year but Fell Short of Expectations
3rd Plant Utilization to Normalize from 4Q... 2Q CMO Contract Wins Expected to Be Fully Reflected

[Asia Economy Reporter Minwoo Lee] Samsung Biologics posted results below expectations for the third quarter of this year. Although it grew compared to the same period last year, the growth rate was below expectations. This is attributed to a decline in factory utilization rates and an increase in selling and administrative expenses. As factory utilization normalizes, significant growth is expected from the fourth quarter onward.

On the 22nd, Meritz Securities maintained a 'Buy' rating on Samsung Biologics but lowered the target price by 6.25% to 900,000 KRW. This adjustment is due to somewhat disappointing results in the third quarter of this year.

Earlier, Samsung Biologics announced that it recorded sales of 276.4 billion KRW and an operating profit of 56.5 billion KRW in the third quarter. Sales increased by 48.57% and operating profit by 139.46% compared to the same period last year. However, operating profit fell short of market consensus by 12.2%. Jiha Kim, a researcher at Meritz Securities, explained, "Sales exceeded expectations thanks to a slight improvement in the utilization rate of the third plant, but operating profit fell short due to increased staffing and commission payments related to the expansion of the fourth plant."

It is expected that the company will enter a phase of significant earnings growth starting in the fourth quarter. Although costs related to the expansion of the fourth plant will continue to rise, the cost ratio is expected to improve due to increased utilization of the third plant. The effect of a surge in contract manufacturing organization (CMO) orders in the second quarter is also expected to fully materialize from the fourth quarter. Based on these factors, sales are projected to reach 294.9 billion KRW and operating profit 69.3 billion KRW in the fourth quarter, representing increases of 7.4% and 22.7%, respectively, compared to the third quarter.

Researcher Kim stated, "Although cost increases due to the expansion of the fourth plant will continue, making a downward revision of this year's profit forecast inevitable, benefits are expected following the announcement of the U.S. Food and Drug Administration (FDA) advisory committee's review results on Biogen's Alzheimer's treatment on the 6th of next month." He added, "The early phase 2/3 results of COVID-19 treatments from ViroBioTechnology and GlaxoSmithKline at the end of the year are also expected to positively impact the stock price."

This content was produced with the assistance of AI translation services.