Earnings Expected to Rise Again from 2024
The author is an analyst of NH Investment & Securities. He can be reached at pk.park@nhqv.co. -- Ed.
We forecast 4Q22 sales of W610.6bn and OP of W249.7bn, falling short of consensus due to won appreciation. While growth will likely remain stagnant in 2023 amid forex rate effects and costs for plant #4, earnings should rise again from 2024. Earnings at Bioepis are expected to grow in earnest in 2024 on the US launch of Hardrima.
2023, a growth preparation period
We maintain a Buy rating and TP of W1.15mn on Samsung Biologics. On a non-consolidated basis, we forecast 4Q22 sales of W610.6bn (+37% y-y) and OP of W249.7bn (+93% y-y). OP is likely to fall short of consensus on both a consolidated and non-consolidated basis.
The sluggish forecast is due to a drop in the dollar/won rate, which came in below our estimate—we previously expected a 4Q22 dollar/won rate of US$/W1,470, but the actual figure came in at US$/W1,358. While the forex rate was largely similar, sales declined q-q in 4Q22 due to a drop in overall ASP. That said, as the forex rate and ASP decline are one-off factors, we maintain our valuations and TP.
We predict non-consolidated 2023 sales of W2,189.4bn (-5% y-y) and OP of W857.5bn (-6% y-y), and assume that the dollar/won rate will re-enter the US$/W1,100 range from 3Q23. Operations should begin in earnest at plant #4 from 4Q23, with sales for the quarter coming to W35.7bn. Of note, the plant ran at 10% capacity in 3Q22. Depreciation cost for the new plant are estimated at W5bn for 4Q22 (initial operation) and W80bn pa from 2024.
Earnings outlook for Samsung Bioepis
On a consolidated basis, we forecast 4Q22 sales of W834.8bn (+88% y-y) and OP of W249.4bn (+94% y-y). Our estimates omit 10% (W24.9bn) of Bioepis’s sales and 20% (W11.8bn) of its OP. PPA amortization is estimated at W47.4bn.
The most important factor for Bioepis in 2023 is the US launch of Hadrima, a biosimilar of Humira. Partner company Organon mentioned the possibility of PBM listing in 2023 during its 3Q22 earnings call, which could result in full-fledged growth in 2024. While the level of Hadrima inventory at Organon is important to Bioepis, the figure has yet to be disclosed.