“Rockville plant offsets impact of strike”; Samsung Biologics target price: 1.9 million won

[Financial News] Hyundai Motor Securities maintained its Buy (BUY) rating and target price of 1.9 million won for Samsung Biologics, saying the company’s third-quarter results exceeded market expectations.
Production disruptions caused by the strike in the second quarter had some impact on results, but sales from the Rockville, Maryland, plant offset it, according to the analysis. However, it said that, as new orders take time to turn into actual contracts, a full-fledged recovery in orders and the schedule for expanding Plant 6 should be expected next year.
According to Hyundai Motor Securities on the 22nd, Samsung Biologics’ third-quarter revenue rose 30.2% year over year to 1.4903 trillion won. Operating profit increased 1.1% to 640.1 billion won, and the operating margin was 43.0%. Revenue and operating profit exceeded market consensus by 9.8% and 4.7%, respectively.
Kim Hyun-seok, a researcher at Hyundai Motor Securities, explained, “Production disruptions caused by the strike in the second quarter had some impact on revenue, but the Rockville plant generated more revenue than expected, offsetting that impact.” He expected revenue in the fourth quarter to be at a level similar to the third quarter.
However, the analysis said it would be difficult to be optimistic that the second-half earnings trend would continue unchanged. This is because production schedules were temporarily concentrated in the second half after the Rockville plant began operations in the second quarter of this year.
With Plant 5 and the Rockville plant not yet operating at full capacity, related costs were reflected in the third-quarter cost-of-sales ratio, which rose to 50.4%. That was 9.0 percentage points higher than the 41.4% recorded in the same quarter a year earlier.
The timing of a recovery in new orders was also cited as a key variable. Hyundai Motor Securities said customer inquiries about placing orders, which had declined since last year amid tariff-related uncertainty, had been recovering since April this year as tariff rates were finalized following the Korea-U.S. tariff agreement and the announcement of Section 232 of the Trade Expansion Act of 1962 (Section 232). It noted, however, that uncertainty related to the strike could still weigh on customers.
Researcher Kim said a recovery in orders could be expected from next year, noting that it typically takes a year for discussions on new orders to turn into actual contracts. Accordingly, he forecast that construction of Plant 6, scheduled to begin at the end of this year, could be delayed until early next year.
Hyundai Motor Securities estimates Samsung Biologics’ revenue and operating profit for this year at 5.53 trillion won and 2.405 trillion won, respectively. It maintained its target price at 1.9 million won. This represents 34.1% upside from the closing price of 1,417,000 won on the 21st.
[email protected] Kang Jung-mo Reporter