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A bird’s-eye view of the Celltrion Global Biotechnology Research Center. [사진 제공 = 셀트리온]
“Even in terms of performance, Celltrion is three times that of Samsung Biologics, so why is Samba twice as much as Celltrion?” “I have no ability than Celltrion, but the stock price is amazing.” “This is stock price manipulation.
I recently got an email bomb while writing an article for Samsung Biologics. It was an article stating that Samsung Biologics’ stock price reached its highest price and was approaching 1 million won, and readers, who are believed to be Celltrion shareholders, sent a bunch of protesting messages. Even if you look at the article comments, there are few mentions of Samsung Biologics, and there are many articles related to Celltrion. It was said that the value of Samsung Biologics was outrageously overvalued compared to Celltrion. Why are the shareholders of Celltrion so angry? Also, is Samsung Biologics really overvalued?
Celltrion’s earnings are high, but why is Samsung Biologics’ market cap high?
Looking at the fragmentary performance, Celltrion shareholders nodded to protest. This is because Celltrion’s sales and operating profit are far ahead of Samsung Biologics, but in the stock market, it is actually undervalued compared to Samsung Biologics. Even if I have Celltrion, I think my stomach will have to hurt.
In fact, Celltrion’s sales and operating profit last year recorded KRW 1.8491 trillion and KRW 7121 billion, respectively. During the same period, Samsung Biologics’ sales and operating profits exceeded KRW 1,166.4 billion and KRW 292.8 billion.
In the first quarter of this year alone, Samsung Biologics recorded sales of KRW 260.8 billion and operating profit of KRW 74.3 billion, while Celltrion recorded sales of KRW 475.7 billion and operating profit of KRW 207.7 billion.
However, in the market, Samsung Biologics is more recognized.
As of the closing price on the 27th, Samsung Biologics’ market cap was KRW 54,453.8 billion. This is a whopping 17 trillion won higher than Celltrion (37,5133 billion won).
The indicator that can determine the level of appraisal of the stock price compared to the corporate value also indicates that Samsung Biologics is overvalued than Celltrion. Based on a 12-month forward share price/earnings ratio (PER), Samsung Biologics is receiving a valuation of 150x, but Celltrion remains at 42x. This means that Samsung Biologics is more than three times more expensive than Celltrion. Of course, Celltrion Healthcare did not take into account the company value comparison.
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Celltrion Corona 19 antibody treatment,’Rekironaju’. [사진 출처 = 셀트리온]
Samsung Biologics is’consignment production’… Celltrion’Biosimilar’ business area is different
In fact, Samsung Biologics and Celltrion are often talked about because they are leading bio companies representing Korea. It’s like who is a better company, who is the real K-Bio boss.
If so, is Samsung Biologics a better company than Celltrion since its earnings are low but its stock price is high? Probably not. Since the business areas are distinctly different, it is somewhat unreasonable to make a simple comparison like this.
In fact, Samsung Biologics is a biopharmaceutical consignment manufacturing (CMO) company that produces drugs launched by global pharmaceutical companies on consignment, while Celltrion is a company that makes’biosimilars’, which are clones of new drugs developed by global pharmaceutical companies. In short, Celltrion makes generic drugs, and Samsung Biologics works to produce drugs instead of receiving requests from global pharmaceutical companies.
For example, in the semiconductor industry, if you have a fabless who specializes in design only and a foundry that specializes in production only, it is difficult to say who is the better company even if you can compare performance or stock price. As such, the comparison between Celltrion and Samsung Biologics cannot be established in the first place.
Nevertheless, the shareholders of Celltrion are still angry. Still, it is because companies with the ability to develop new drugs should receive higher value than companies that are in charge of simple consignment production. The logic is that there is no reason for Celltrion to be undervalued compared to Samsung Biologics in terms of performance or technology.
In fact, Celltrion has not only developed an existing biosimilar, but recently developed its own new drug,’Recyrona’, a bio-antibody treatment for COVID-19. How can a company that develops treatments through its own technology be undervalued compared to Samsung Biologics, which is a consignment production of vaccines?
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Samsung Biologics 3 plant view. [사진 출처 = 삼성바이오로직스]
Vaccine rather than cure?… The important thing is the market atmosphere
I asked stock market experts. What is the reason why the stock price is so different? Researchers at securities companies explain this as a result of reflecting the current market conditions. At any time, there is an atmosphere in the market, but the current market atmosphere is more favorable to Samsung Biologics than Celltrion.
Actually, the achievements of Celltrion must be recognized, but unlike vaccines, treatments are necessary drugs after confirmation. It is an opinion that in the current atmosphere where the global supply of the Corona 19 vaccine is accelerating, the expectation for the vaccine seems to be higher than for a post-prescription treatment.
A researcher in charge of bio at a securities company said, “In the current situation where there are more unconfirmed cases than those with Corona 19, the expectation for a vaccine is inevitably higher than for a cure.” As is emerging, the demand for vaccines will continue to increase over the next few years.”
Looking back at the time when expectations for the COVID-19 antibody treatment increased at the end of last year, Celltrion at that time was drawing attention from the market, showing the highest price exceeding 400,000 won. On the other hand, Samsung Biologics’ attention was less than this. It reflected the market situation at the time when the thirst for a cure was greater than for a vaccine.
In the end, it seems that Samsung Biologics’ stock price is evaluated higher than Celltrion, not because it is a better company, but because it is receiving more benefits from the current market atmosphere.
Since Samsung Biologics and Celltrion are Korea’s leading bio companies, they will continue to be compared in the future. But now, rather than exhausting debates about who is a better company, I would like to see articles that support win-win and development more often.
[김경택 매경닷컴 기자 [email protected]]
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