Korean brokerages keep Samsung Biologics targets near 2 million won after Q3 results
In short
Samsung Biologics reported third-quarter consolidated revenue of 1.4903 trillion won, up 19%, and operating profit of 640.1 billion won, up 1%. Kiwoom Securities set a 2 million won target price with a 'buy' rating on 22 October, and Seoul Economic Daily said six of ten brokerages that published reports that day put the target at 2 million won.
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Samsung Biologics' third-quarter consolidated revenue was 1.4903 trillion won, up 19% from a year earlier, and operating profit was 640.1 billion won, up 1%, according to the figures cited by Kiwoom Securities. Seoul Economic Daily said the company disclosed the results the day before and described them as the highest quarterly results on record. Chosun Ilbo gave the market consensus as 1.3569 trillion won in revenue and 611.4 billion won in operating profit, and the operating margin as 43%. [ 1 , 2 ]
Kiwoom Securities said on 22 October that it kept a 'buy' rating and a 2 million won target price. The previous close was 1.417 million won. The outlets differ on the direction of the change: Chosun Ilbo says Kiwoom kept its target, while Seoul Economic Daily says it raised the target from 1.98 million won and Newsis also says it raised it. [ 1 , 2 , 3 ]
Kiwoom said Rockville plant revenue recognition and the Plant 5 ramp-up drove the beat, along with full operation of Plants 1 to 4, despite lower average exchange rates and production disruption from the May strike. It said the cost ratio rose 9 percentage points to 51% because of product mix and the Rockville plant. [ 1 , 3 ]
Analyst Heo Hye-min (허혜민) said a court had widened the scope of the ban on industrial action, postponing the union's second strike. Kiwoom said this favours the company, eases customer concerns about production disruption and raises the chance of large order contracts. Heo expects Plant 6 construction to begin between the end of this year and early next year. Kiwoom forecast fourth-quarter revenue of 1.4336 trillion won and operating profit of 662.0 billion won. [ 1 , 2 , 3 ]
Seoul Economic Daily, citing FnGuide, said six of the ten brokerages that published reports on 22 October set the target at 2 million won, which implies upside of about 41.1% from the previous close. The others were between 1.8 million and 1.95 million won. Meritz Securities kept 2 million won and said the timing of new orders turning into contracts and the speed of Plant 5's shift to commercial production are key variables. Its analyst Kim Jun-young (김준영) said labor-management talks are still under way. Samsung Securities kept the lowest target, 1.8 million won, and its analyst Han Seong-min (한성민) said rising cost ratios slowed operating profit growth. [ 2 ]
Why it matters
The brokerage reports tie the outlook for new orders to the court's wider ban on industrial action and the postponement of a second union strike. Analysts also name the timing of new contracts and the pace of the Plant 5 ramp-up as factors to watch.
Key facts
- Samsung Biologics' third-quarter consolidated revenue was 1.4903 trillion won, up 19% year on year, and operating profit was 640.1 billion won, up 1%. [ 1 , 2 , 3 ]
- Both figures were above market consensus; Chosun Ilbo gave the consensus as 1.3569 trillion won in revenue and 611.4 billion won in operating profit. [ 1 , 3 ]
- Kiwoom Securities kept a 'buy' rating and a 2 million won target price; the previous close was 1.417 million won. [ 1 , 2 , 3 ]
- Of ten brokerages that published reports on 22 October, six set the target at 2 million won and the others set it between 1.8 million and 1.95 million won, according to Seoul Economic Daily citing FnGuide. [ 2 ]
- Kiwoom said the cost ratio was 51%, up 9 percentage points from a year earlier, because of product mix and the Rockville plant. [ 1 , 3 ]
- Kiwoom forecast fourth-quarter revenue of 1.4336 trillion won and operating profit of 662.0 billion won. [ 1 , 3 ]
Confirmed by several sources
- Third-quarter consolidated revenue rose 19% to 1.4903 trillion won and operating profit rose 1% to 640.1 billion won, above market consensus. [ 1 , 2 , 3 ]
- Kiwoom Securities attributed the results to Rockville plant revenue recognition and the Plant 5 ramp-up, despite lower average exchange rates and the May strike. [ 1 , 2 , 3 ]
- Kiwoom said a court's wider ban on industrial action postponed the union's second strike and eased customer concerns about production disruption. [ 1 , 2 , 3 ]
Still unclear
- Whether Kiwoom Securities raised or kept its target price. Chosun Ilbo says it kept 2 million won; Seoul Economic Daily says it raised the target from 1.98 million won; Newsis says it raised it from the earlier level.
- When new large order contracts will be signed and Plant 6 construction will start. Kiwoom's analyst expects Plant 6 construction between the end of this year and early next year, but this is a forecast, and Meritz Securities called the timing of orders turning into contracts a key variable.
- The state of labor-management talks. Meritz Securities said negotiations are still under way; the documents give no further detail.