[Click eStock] "SK Bioscience, Concerns Gradually Eased Starting Next Year"

Possibility of Delays Due to Surge in Vaccine QA·QC Outsourcing Work in 3Q This Year
Continuous Growth Expected from Next Year

[Asia Economy Reporter Minwoo Lee] SK Bioscience is expected to show stable growth from next year, putting aside uncertainties such as production disruptions in the second half of this year. This is because the contract manufacturing organization (CMO) market for vaccines and biopharmaceuticals continues to grow, and positive factors such as the increased possibility of Novavax's COVID-19 vaccine receiving emergency listing from the World Health Organization (WHO) are anticipated.

On the 1st, NH Investment & Securities maintained a 'Buy' rating on SK Bioscience based on these factors and raised the target price by 21.4% to 340,000 KRW. The closing price the previous day was 270,500 KRW.

First, the value of contract development and manufacturing organization (CDMO) and contract manufacturing was revised upward from 6 trillion KRW to 8 trillion KRW. This was based on continuous demand and assuming the largest contract scale in 2022. The value of the self-developed COVID-19 synthetic antigen vaccine 'GBP510' was also raised by 27.7% to 12 trillion KRW. The price per dose of the self-supplied quantity was adjusted upward from 11.8 USD to 16 USD, the level of Novavax. Researcher Byung-guk Park of NH Investment & Securities explained, "Due to recent approval of age restrictions for Pfizer booster shots and concerns about the safety of a third dose of messenger RNA (mRNA) vaccines, the recombinant protein method has been highlighted. At the same time, the delay in approval of the Novavax vaccine, which uses the same method, led to an increase in the price of self-supplied vaccines."

The expansion of the new factory in Andong, Gyeongbuk, scheduled for completion in 2024, is also progressing smoothly. Researcher Park said, "Although the new factory is 1.5 times larger than the existing factory of about 20,000 pyeong, SK Bioscience's corporate valuation is about 1.5 trillion KRW, which is 10 times the production capacity. The value of the existing factory's CMO is about 8 trillion KRW."

For the second half of this year, sales of 826.1 billion KRW and operating profit of 365.4 billion KRW are expected. Researcher Park analyzed, "However, some of the quality assurance (QA) and quality control (QC) verifications, which are the basis for revenue recognition of government contract quantities of completed Novavax vaccines, are being conducted through outsourcing. Due to workload concentration caused by COVID-19, verification for last month's batch may be delayed. Therefore, the operating profit forecast for the third quarter is adjusted downward from 129.3 billion KRW to 97 billion KRW due to uncertainty."

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