MERITZ Securities forecasted on the 22nd that both revenue and profitability of COSMAX's Chinese business are improving, expecting strong performance in the second quarter. The target price was raised about 10% from the previous 230,000 won to 258,000 won, maintaining a 'buy' rating.
Park Jong-dae, a researcher at MERITZ Securities, analyzed, "Despite the high base from the previous year, both revenue and profitability improved in the first quarter for the Chinese business," adding, "The resumption of orders from large offline brands like Baiqilin provides confidence in the recovery of cosmetics consumption in China."
Results are also emerging from investment in the vertical integration of the cosmetics manufacturing process, including raw material development and packaging. The subsidiary, which had been overlooked, recorded an operating profit of 4.5 billion won in the first quarter. Especially, results are expected from the global raw materials platform business and the packaging market for venture indie brands.
A green light has also appeared for COSMAX's second quarter performance outlook. The domestic standalone sales growth rate for the first quarter was 15%, but sales are expected to increase by more than 20% in the second quarter. The domestic production expansion target was achieved ahead of schedule in the first quarter, and the effects of the peak season for sunscreen products are anticipated starting in the second quarter.
Researcher Park noted, "Sunscreen is the area COSMAX is focusing on the most this year," and added, "The effect of expanding new orders is expected to be significant."