SK Securities forecasted on the 11th that SME, a cosmetics glass container corporation, will enter a full-fledged growth phase starting this year. SK Securities issued a 'buy' investment rating for SME and set a target price of 7,500 won, which is 86.8% higher than the previous closing price of 4,015 won.
Research Institute Heo Seon-jae noted that as plastic regulations are strengthened globally and cosmetics companies pursue premiumization strategies, the demand for glass containers will continue to grow. It is also said that the cost difference between plastic and glass containers has disappeared.
Heo said, "Recently, various brands like Amorepacific Corporation, MA:NYO, and Dear Dahlia are actively applying glass containers to their core products," adding, "SME's major client, Banau's color cosmetics brand 'Fwee,' recorded explosive sales growth through its glass container-based products (pudding pots)."
Heo explained that as SME's sales increase, the operating profit margin could also improve, as a furnace must operate 24 hours to melt glass for producing glass containers, reducing fixed cost burdens as production increases.
Heo added that "SME is the only company in the industry to have established an electric melting furnace and has a high recycling glass (PCR) input technology of about 70%," and stated, "It has a competitive advantage with the largest lineup in the industry of pre-molded molds."
Heo concluded, saying, "SME will enter the operating leverage zone starting in 2023, and the effects of rising operating profit margins will begin to appear in earnest this year."