Samsung C&T Corp., the parent company of Samsung Group, is likely to enjoy growth in value on the back of Samsung BioLogics, a biopharmaceutical unit of the conglomerate, an analyst report said Tuesday.
As of the first half of the year, Samsung C&T held 43.4 percent stake in Samsung BioLogics, 19.3 percent in Samsung Life Insurance, and 100 percent in Samsung Well Story.
Jeong Dae-ro and Lee Su-yeon, analysts at Mirae Asset Daewoo, said in the report that they raised the target price of Samsung C&T stocks to 190,000 won ($169.8) per share, citing a gain in the value of Samsung subsidiaries owned by the parent company mainly engaged in engineering and construction.
In particular, an anticipated increase in Samsung BioLogics’ stake value will raise the corporate value of Samsung C&T, they said.
According to the report, Samsung C&T holds about 28 million shares of Samsung BioLogics, valued at more than 15 trillion won at the stock price of 531,000 won per share as of Tuesday morning.
The 15 trillion won is more than Samsung C&T’s holding of Samsung Electronics, estimated at around 13 trillion won (4.7 percent, 299 million shares).
“The new target price is attributed to Samsung C&T’s improved earnings and the increased value of the company’s stakes in subsidiaries such as Samsung BioLogics since the release of the second-quarter earnings,” the report said.
Samsung C&T’s current discount rate to net asset value (NAV) is about 50 percent. This means that the stock price has not reflected the company's improved earnings and the increased value in stakes, it added.
The analysts predicted that Samsung BioLogics’ quarterly revenue would go up from 125 billion won in the second quarter to 146 billion won in the third quarter, and to 174 billion won in the fourth quarter.
Accordingly, the company’s annual sales are likely to expand 25 percent from 460 billion won last year to 580 billion won this year, they said.