"Samsung Biologics Poised for Growth with Plant 5 and Biosecurity Law"
Meritz Securities: “A long-term approach is necessary, considering the grace period until 2032.”
He further explained, “Although there is still a possibility of the Biosecurity Law passing by the end of the year, the grace period, expected until 2032, means the actual benefits should be viewed from a mid- to long-term perspective.”
Kim also noted, “In the short term, the passing of the law could provide upside potential” and added that they adjusted the target price by applying a 40% premium to the average EV/EBITDA multiple of 22.97x from global peers Lonza, Thermo Fisher, and Catalent.
For Q3 earnings, He predicted results in line with market expectations, with Samsung Biologics’ sales projected to rise 2.3% year-over-year to KRW 1.058 trillion (approx. $790 million), while operating profit is expected to fall 6.1% to KRW 299.2 billion (approx. $223 million).
Looking ahead, Kim remained optimistic. He stated, “Samsung Biologics’ Plant 5 is expected to be completed in April next year. Unlike Plants 1-3, Plant 4 is already quickly ramping up production, and Plant 5 is expected to follow a similar rapid ramp-up.”
He also added, “With favorable exchange rates and increasing contributions from Plant 4’s ramp-up, we anticipate continued earnings growth. After Plant 5’s completion, we expect Plant 6 to break ground, with an anticipated completion date of 2027.”
The U.S. Biosecurity Law seeks to block Chinese biotech firms such as WuXi AppTec and the Beijing Genomics Institute from participating in U.S. pharmaceutical manufacturing due to national security risks. This legislation would ban contracts, financing, and collaborations with these entities. After passing the House of Representatives, the bill is now pending a Senate vote. In response to these heightened regulatory measures, WuXi AppTec is reportedly considering divesting its cell and gene therapy unit in Philadelphia.