Brisk Growth Expected in 2022
The author is an analyst of KB Securities. He can be reached at kimtaehee@kbfg.com. -- Ed.
Maintain BUY, target price of KRW1.24mn; industry top pick
We maintain BUY and TP of KRW1.24mn on Samsung Biologics. The company remains our industry top pick considering that:
(1) revenue is forecast to grow by a brisk 20% in 2022;
(2) the addition of a fourth bio drug plant in late 2022 should add to growth momentum; and
(3) new businesses (e.g., mRNA vaccine, cell/gene therapy CDM) are promising. Using the DCF model, we derived a TP of KRW1.22mn but kept our TP at KRW1.24mn given that the difference is negligible. Reflecting 2021 market data, we adjusted WACC to 7.27%, risk-free rate to 1.29% and market risk premium to 7.16% (previously 7.34% WACC, 1.02% risk-free rate, 7.37% market risk premium).
4Q21 preview: OP to be below consensus but not of concern
We forecast 4Q21 consolidated revenue at KRW436.7bn (+16.4% YoY) and OP at KRW130.5bn (+41.0% YoY); revenue should be in line with the market consensus while OP should fall slightly below. Revenue growth will likely be fueled by high capacity utilization rates and ASP hikes, and OPM should be hit by increasing investments in new businesses and year-end performance bonus payments.
Brisk growth expected in 2022 amid continual CDMO shortage
We expect revenue to grow over 20% to KRW1.89tn in 2022 on the back of strong demand and a continual shortage of bio drug CDMOs. The shortage is evident in the increased value of deals: the value of the company’s contract with Lilly was increased from KRW179.5bn to KRW321.1bn and the contract with Roche from KRW444.4bn to KRW605.3bn. In addition to the company’s earnings growth, growing sales of mRNA vaccines, the construction of a cell/gene therapy CDMO plant and order intake for the fourth bio drug plant should provide stock momentum.