NH Investment & Securities analyzed that COSMAX will set a record in sales each quarter due to the increase in capacity (CAPA) of separate corporations and positive order trends. It then raised the target stock price from 210,000 won to 225,000 won and maintained an investment opinion of 'buy.' The closing price of COSMAX on the previous trading day was 180,600 won.
This year, the consolidated sales and operating profit of COSMAX for the first quarter are expected to rise by 9% and 5% year-on-year, respectively, to 575 billion won and 47.8 billion won. This figure takes into account the high performance base impacts from China and the United States in the first quarter of last year.
Jung Ji-yoon, a researcher at NH Investment & Securities, noted, 'Although some brand products have transferred production to factories in China, exports of direct and indirect shipments from Korea have increased since February,' and explained, 'Through a balanced portfolio of basic and color cosmetics, the remarkable performance of brands entering the top 10, and strict loss management policies, stable revenue will be achieved.'
This year, the capacity of the separate corporation is expected to increase by 30%, with quarterly sales estimated to exceed 400 billion won starting from the second quarter. Researcher Jung stated, 'As quarters continue, it will be possible to set new sales records.'
In the first quarter of this year, the Thai subsidiary performed well, and recently, Chinese brands have also increased exports of cost-effective C-beauty to nearby Southeast Asian countries, leading to greater opportunities for local production in Southeast Asia. Researcher Jung predicted, 'Since the halal product guarantee law in Indonesia was announced in October 2016, the expected outlook for the next 1-2 years is to improve the profit scale of the Chinese subsidiary to a level comparable to that of winning the Southeast Asian market.'
He continued, 'I am raising the target stock price to 225,000 won and maintaining the most preferred stock in the cosmetics original design manufacturer (ODM) sector.'