The author is an analyst for NH Investment & Securities. He can be contacted at [email protected] — ed.
Samsung Biologics is expected to post healthy profits in 4Q23. We attribute the company’s recent share price rise to an easing of valuation burden (based on 2025F EV/EBITDA) and growth potential in the antibody market. The expansion of Plant #6 will be important for shares to move beyond the current box range. Eyes should be on Alzheimer’s ADC antibodies and news on new modalities.
4Q23 Preview: Earnings Expected to Come In Strong
We maintain a Buy rating and TP of W950,000 on Samsung Biologics. On a non-consolidated basis, we maintain our previous 4Q23 estimates, forecasting revenue of W824.8 (+10% yy) and OP of W324.9 billion (+5% yy).
Although it is difficult to assess the number of production batches, we assess Samsung Biologics’ sales share for 2H23 at 58% (vs. forecast of 60%), keeping our sales projection intact. Following its surprise sales in 3Q23, the company likely experienced a contraction in sales in 4Q23, taking into account one-time factors such as compensation for non-performance of customer contracts. At Factory No. 4, sales in 4Q23 likely amounted to 109.4 billion won (up 78.1 billion won quarter-on-quarter).
We forecast 4Q23 consolidated revenue of 1.08 trillion won (+12% yy) and OP of 319.9 billion won (+2.3% yy), consistent with our previous forecast. We estimate that via consolidated adjustments, sales and OP decreased by W44.7 billion and W12.5 billion respectively, while PPP rose to W55 billion.
With space-saving multiples, the keys will be industry news and the confirmed expansion of Factory No. 6
On an unconsolidated basis, we forecast 2024 revenue of 3.32 trillion won (+13% yy) and OP of 1.35 trillion won (+13% yy). We note that our 2025F EV/EBITDA of 24.0x is in line with the 20.1x average of competitors such as Thermo Fisher and Danaher. We attribute the recent rise in the company’s stock price to an easing of the valuation burden.
Confirmation of the #6 plant expansion (scheduled for 2025) will be key for shares to break out of the current range, but news about the growth of the antibody market and to the new terms linked to factory no. 6. While organic indexes have been climbing lately, note the Evercore conference on December 1, during which Danaher said that: 1) the annual outlook for 2024 should be communicated in January; 2) the biotechnology CMO activity is stabilizing; and 3) opportunities are likely to emerge in the production of new Alzheimer’s disease drugs.
The author is an analyst for NH Investment & Securities. He can be contacted at [email protected] — ed.
Samsung Biologics is expected to post healthy profits in 4Q23. We attribute the company’s recent share price rise to an easing of valuation burden (based on 2025F EV/EBITDA) and growth potential in the antibody market. The expansion of Plant #6 will be important for shares to move beyond the current box range. Eyes should be on Alzheimer’s ADC antibodies and news on new modalities.
4Q23 Preview: Earnings Expected to Come In Strong
We maintain a Buy rating and TP of W950,000 on Samsung Biologics. On a non-consolidated basis, we maintain our previous 4Q23 estimates, forecasting revenue of W824.8 (+10% yy) and OP of W324.9 billion (+5% yy).
Although it is difficult to assess the number of production batches, we assess Samsung Biologics’ sales share for 2H23 at 58% (vs. forecast of 60%), keeping our sales projection intact. Following its surprise sales in 3Q23, the company likely experienced a contraction in sales in 4Q23, taking into account one-time factors such as compensation for non-performance of customer contracts. At Factory No. 4, sales in 4Q23 likely amounted to 109.4 billion won (up 78.1 billion won quarter-on-quarter).
We forecast 4Q23 consolidated revenue of 1.08 trillion won (+12% yy) and OP of 319.9 billion won (+2.3% yy), consistent with our previous forecast. We estimate that via consolidated adjustments, sales and OP decreased by W44.7 billion and W12.5 billion respectively, while PPP rose to W55 billion.
With space-saving multiples, the keys will be industry news and the confirmed expansion of Factory No. 6
On an unconsolidated basis, we forecast 2024 revenue of 3.32 trillion won (+13% yy) and OP of 1.35 trillion won (+13% yy). We note that our 2025F EV/EBITDA of 24.0x is in line with the 20.1x average of competitors such as Thermo Fisher and Danaher. We attribute the recent rise in the company’s stock price to an easing of the valuation burden.
Confirmation of the #6 plant expansion (scheduled for 2025) will be key for shares to break out of the current range, but news about the growth of the antibody market and to the new terms linked to factory no. 6. While organic indexes have been climbing lately, note the Evercore conference on December 1, during which Danaher said that: 1) the annual outlook for 2024 should be communicated in January; 2) the biotechnology CMO activity is stabilizing; and 3) opportunities are likely to emerge in the production of new Alzheimer’s disease drugs.