Domestic stock markets continue to decline, but Samsung Biologics has seen its shares rise by over 4%. This increase is attributed to expectations of growth in earnings due to expanded production facility operations ahead of its third-quarter earnings announcement on October 21.
As of 9:24 a.m. on October 19, Samsung Biologics shares were trading at 1,355,000 won, up 57,000 won (4.39%) from the previous trading day, according to the Korea Exchange.
The company's strong performance appears to be linked to optimism surrounding its upcoming earnings report. Analysts predict continued growth as high operating rates at existing facilities are maintained, and revenue from the new Songdo Plant 5 and the Rockville Plant in the U.S. begins to materialize.
According to financial information firms, the consensus estimate for Samsung Biologics' third-quarter earnings is approximately 1.3569 trillion won in revenue and 611.4 billion won in operating profit. This represents a 7.9% increase in revenue compared to the same period last year, while operating profit is expected to decrease by 3.5%. The operating profit margin is projected to be around 45%.
Different securities firms have similar forecasts. Korea Investment & Securities estimates third-quarter revenue at 1.3728 trillion won and operating profit at 617.8 billion won, reflecting a 9% increase in revenue and a 2% decrease in operating profit year-on-year. Hyundai Motor Securities predicts revenue of 1.3641 trillion won and operating profit of 612.6 billion won, both in line with market expectations.
Key factors driving the expected improvement in earnings include contributions from new production facilities. The Songdo Plant 5 has entered the process performance qualification (PPQ) stage, which verifies process stability and quality before commercial production. Korea Investment & Securities anticipates that the Songdo Plant 5 will generate 28.3 billion won in revenue during the third quarter, while the Rockville Plant's revenue is estimated at 100 billion won.
The U.S. plant is currently operating at about 50% capacity, and analysts suggest that it could reach breakeven at this level. If additional orders increase the operating rate, it is expected to contribute to improved profitability.
However, labor disputes pose a risk. Samsung Biologics faced production disruptions due to a strike in May, which, according to analysts, resulted in an estimated revenue loss of about 150 billion won. With the union planning another strike starting October 26, the outcome of labor negotiations could impact future production schedules and earnings forecasts.
* This article has been translated by AI.
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