[Click eStock] "Samsung Biologics, Expected to Pass US Biosecurity Act... Target Price Maintained"

On the 12th, Samsung Securities maintained its buy rating and target price of 1.1 million KRW for Samsung Biologics, stating that "benefits are expected if the US Biosecurity Act passes."

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On the same day, Seok Geun-hee, a researcher at Samsung Securities, said, "With expectations for the enactment of the US Biosecurity Act, the stock prices of pharmaceutical contract manufacturing organizations in Korea, Japan, and India are rising simultaneously. Although discussions on the Biosecurity Act have stalled after the US presidential election, it is expected to proceed quickly under the Trump administration next year."

Currently, the Biosecurity Act in the US is awaiting resolution by the Senate plenary session and the president's signature. The schedule in the US Senate is undecided, but recently President-elect Donald Trump announced that he would impose additional tariffs on China. Considering the tough stance on China, the Biosecurity Act, which aims to curb Chinese companies, has a high chance of passing.

However, it is expected to take some time before the gap between the increased valuation (stock price relative to corporate value) and actual performance narrows after the bill is enacted. Researcher Seo said, "Of course, even if the Biosecurity Act passes, it is difficult for it to be reflected in Samsung Biologics' short-term sales due to an eight-year grace period," adding, "Samsung Biologics can replace some antibody drug-related services currently provided by Chinese companies. Given the steady growth prospects through customer expansion, it is judged that downside rigidity has been secured through performance improvement."

Next year's sales are expected to reach 5.3786 trillion KRW, and operating profit 1.7223 trillion KRW, increasing by 17.6% and 38.2% respectively compared to this year. Researcher Seo stated, "We are also expanding contract orders with global pharmaceutical companies recently. The 5th plant, scheduled to operate in the second quarter of next year, has succeeded in securing orders before operation, and the establishment of the 6th plant is expected to be announced soon."

He added, "A valuation premium appears due to the contract manufacturing organization (CMO) business focused on antibody drugs and higher profitability compared to competitors. For sustainable growth, diversification of antibody drug services and provision of services across bio-pharmaceuticals are necessary," and "Starting antibody-drug conjugate (ADC) services from next year, we have secured a new growth engine."

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