Kiwoom Securities evaluated that SILICON2 is expected to benefit as a partner in the growth of K-Beauty, but the possibility of the largest shareholder selling equity should be noted. They maintained an investment opinion of 'Buy' and raised the target price to 62,000 won. The closing price for SILICON2 the previous day was 49,950 won.
Kiwoom Securities projected that SILICON2 will record sales of 262.3 billion won and operating profit of 55.9 billion won in the second quarter of this year. This is an increase of 45% and 44% compared to the same period last year.
Jo So-jeong, a researcher at Kiwoom Securities, noted, "The results are in line with market expectations," and added, "New growth regions such as Europe and Asia are expected to lead the growth."
North American sales were expected to decrease by 20% year-on-year to 49.5 billion won. Researcher Jo analyzed, "While demand for K-Beauty in the U.S. is solid, logistics movement has been delayed due to tariff impacts," and stated, "It seems that logistics transport was temporarily put on hold while negotiating cost-sharing reflecting the general tariff.
Sales in Europe, Asia, and the Middle East were expected to increase significantly. Sales to Europe are projected to rise by 120% year-on-year to 97.6 billion won, sales to Asia by 73% to 65.1 billion won, and sales to the Middle East by 44% to 20.8 billion won.
Researcher Jo explained, "In regions like Europe and the Middle East, where demand for K-Beauty is blossoming, it is challenging for brands to manage marketing or distribution directly, so the cooperative relationship between brands and SILICON2 is bound to strengthen," adding, "This year, SILICON2 is expected to grow mainly in non-American regions such as Europe, the Middle East, and South America and is projected to solidify its position as a global growth partner for K-Beauty."
However, the possibility of the largest shareholder selling equity could impact investment sentiment. Researcher Jo estimated that the gift tax the largest shareholder, Kim Seong-oon, will have to pay in the future is around 32.6 billion won and noted that selling some of the shares held to pay this will not affect Mr. Kim's management rights or the fundamentals of SILICON2.
He also explained, "However, the fact that the largest shareholder may temporarily sell equity could affect investment sentiment, so it is necessary to be cautious of stock price volatility."