Employees arrive for work at the Samsung Biologics factory in Yeonsu-gu, Incheon, on Tuesday. The company's union wrapped up a full strike that ran from Thursday through Monday and returned to work that day. [Yonhap]
Employees arrive for work at the Samsung Biologics factory in Yeonsu-gu, Incheon, on Tuesday. The company's union wrapped up a full strike that ran from Thursday through Monday and returned to work that day. [Yonhap]

Samsung Biologics shares have continued to weaken as concerns over per-share dilution from a rights offering compound with uncertainty over a threatened union strike. IBK, Hana Securities and Daol Investment & Securities have all cut their target prices for the stock in recent days.

IBK lowered its target price for Samsung Biologics on Wednesday to 2 million won from 2.09 million won ($1,560), while maintaining a buy recommendation.

The shares have been on a downward trend since the company announced the rights offering and the union signaled a three-week strike. On the Kospi on Wednesday, Samsung Biologics was trading roughly 18 percent below its Aug. 27 closing price of 1.58 million won — the session before the rights offering was announced. The stock plunged 6.78 percent on Aug. 28, the day the offering was disclosed, and fell a further 4.51 percent on Friday when the union announced a second general strike of three weeks.

IBK analyst Jeong I-su said the target price cut reflected a 4.7 percent dilution in per-share value from the issuance of new shares. Samsung Biologics plans to issue 2.27 million new shares at 1.32 million won each to raise about 3 trillion won.

On top of the rights offering overhang, the union's threat of a prolonged strike is adding to share price uncertainty. The union plans to launch a second general strike of three weeks starting Oct. 26 — a significant escalation from the five-day first strike in May. "Union strike uncertainty could weigh on the share price, making it a critical time for new order momentum to recover," Jeong said.

The near-term pressures have not, however, translated into weaker earnings. IBK estimated Samsung Biologics' third-quarter consolidated sales at 1.36 trillion won and operating profit at 609.2 billion won, projecting results in line with market expectations. Full operation of plants one through four, along with revenue contributions from the Rockville, Maryland facility and Plant 5, is expected to support continued top-line growth.

New orders are seen as a more important variable than earnings. IBK estimated Samsung Biologics' new orders this year at around 1.2 trillion won, roughly 20 percent of last year's total. The brokerage said, however, that easing uncertainty over US pharmaceutical tariffs has spurred more discussions with global pharmaceutical companies, and it expects new orders to gradually recover from year-end through next year.

The rights offering is expected to accelerate the company's medium- to long-term growth plans. "Once the rights offering payment is completed next month, the groundbreaking of Plant 6 and the acquisition of Swiss Polypeptide will move into full swing, raising expectations for medium- to long-term growth," Jeong said. If the Polypeptide acquisition closes within the year, it is expected to be reflected in consolidated earnings from 2027.

Target price cuts from brokerages also came on Tuesday. Hana Securities lowered its target to 1.95 million won from 2.03 million won, citing dilution from the rights offering, while Daol Investment & Securities cut its target to 2 million won from 2.1 million won, reflecting the increase in shares outstanding.


kacew@heraldcorp.com