Samsung Biologics Holds Steady in Sharp Market Drop... Will the 1 Million Won Era Begin?

Late Last Month, Over 5% Drop; Held Up at -1.12% in Sharp Decline
Among Top 10 by Market Cap, Naver and Celltrion Also Saw Minimal Declines
Annual Sales Surpass 1 Trillion Won... Growth Expectations Rise with COVID-19 Treatment Production Increase

Samsung Biologics held a groundbreaking ceremony for its Plant 4, the world's largest single factory, on November 18 last year at the Incheon Songdo Global Campus.
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Samsung Biologics showed resilience by holding up well even during the sharp market downturn at the end of last month. Having surpassed 1 trillion won in sales for the first time in its history last year, it is analyzed that the demand for contract manufacturing (CMO) remains strong due to the resurgence of COVID-19, and with the expansion of factory operating rates, performance growth is expected to continue.

On the 1st, Samsung Biologics opened at 801,000 won, up 1.01% from the previous trading day. Around 9:13 a.m., the stock price rose further to 809,000 won, an increase of 2.02% from the previous day. It held up well despite the sharp market drop at the end of last month. The KOSPI index fell about 5.23% from 3,200 levels starting on the 26th of last month to 2,976.21 on the 29th. During this period, Samsung Biologics only dropped 1.12%. Among the top 10 market capitalization stocks, except for Naver (NAVER, 0.29%) and Celltrion (0.47%), which actually rose, Samsung Biologics had the smallest decline.

Following a strong performance last year, investor sentiment is interpreted as being drawn by growth expectations going forward. Samsung Biologics recorded consolidated sales of 375.3 billion won and operating profit of 92.6 billion won in the fourth quarter of last year. These figures exceeded market consensus estimates by 45.3% and 76.7%, respectively. Total sales for last year were 1.1648 trillion won, marking the first time in its nine years since establishment that annual sales surpassed 1 trillion won.

Quick response to COVID-19 and securing orders for therapeutic production were key factors. Last year, by actively engaging customers through virtual tours and other efforts, Samsung Biologics signed contract manufacturing agreements for COVID-19 antibody therapeutics with companies such as GlaxoSmithKline (GSK) in the UK and Eli Lilly in the US. The total contract value amounts to 1.78 billion dollars (approximately 1.9131 trillion won), more than double the previous year's sales.

While the third plant is operating at maximum capacity, the possibility of early operation of the fourth plant is increasing. Since COVID-19 is still rampant, contract manufacturing demand is expected to rise. The operating rates for the fourth quarter of last year were reported as 60% for Plant 1, 80% for Plant 2, and 50% for Plant 3. Kyung Choi, a researcher at Heungkuk Securities, said, "With all plants operating at full capacity, new order momentum for the new fourth plant is also expected," adding, "Considering that the target operation date for Plant 4 is 2023, order contracts could be signed from the second half of this year."

Accordingly, securities firms are also raising their target stock prices above 1 million won. Besides Ebest Investment & Securities (1.1 million won) and Yuanta Securities (1.08 million won), which had already set targets above 1 million won, Shinhan Financial Investment (950,000 won → 1 million won) and Meritz Securities (900,000 won → 1 million won) also raised their targets on the 27th of last month.

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