Samsung Biologics (207940.KS) is expected to sustain its growth in the second half of the year on revenue contributions from its Rockville plant in the United States and its Plant 5 in Songdo, according to a forecast. While some production disruptions from a strike are expected in the third quarter, the revenue from new production facilities will offset the impact, and earnings estimates could be raised further in the fourth quarter, analysts said.
Kiwoom Securities said in a report on the 24th that Samsung Biologics' second-quarter results broadly met market consensus. Samsung Biologics' second-quarter revenue was 1.3209 trillion won, up 30% from a year earlier, and operating profit was 586.4 billion won, up 23%. Costs from Plant 5's process performance qualification (PPQ), early operating expenses, and the Rockville plant acquisition were recognized first, but the full operation of Plants 1 through 4 and favorable exchange rates supported earnings.
Kiwoom Securities analyzed that even if production disruptions from the May strike are partly reflected in third-quarter results, about 100 billion won in revenue from the Rockville plant will be recognized and Plant 5's contribution will expand, offsetting the impact. "The revenue contributions from the Rockville plant and Plant 5 will offset the production disruptions," said Hur Hye-min, an analyst at Kiwoom Securities. "Earnings estimates could also be raised in the fourth quarter, and we should keep open the possibility that the polypeptide acquisition raises the 2027 outlook."
The report also highlighted the potential for expanded orders in Europe. "Samsung Biologics plans to establish a European sales office in the Netherlands during the third quarter," Hur said. "By securing a local sales base in Europe, following the United States and Asia, order activities could expand." Kiwoom Securities maintained a "buy" investment rating and a target price of 2.1 million won for Samsung Biologics.
The possibility that profitability temporarily declines during the business expansion is cited as a variable. Hana Securities analyzed that PolyPeptide, the global peptide contract development and manufacturing organization (CDMO) that Samsung Biologics is acquiring for about 2.7 trillion won, posted an operating profit margin of just 2.2% last year, which could dilute the operating profit margin in 2027 when it is incorporated into consolidated results.
However, Kim Sun-ah, an analyst at Hana Securities, stressed, "Since demand for obesity treatment drugs is surging, there are no concerns about orders." She added, "There is also a possibility of medium- to long-term margin improvement through production technology development, workforce reorganization, and facility investment after the acquisition." Hana Securities offered a "buy" investment rating and a target price of 2.05 million won for Samsung Biologics.
