DAOL Investment & Securities adjusted its target price for Kolmar Korea on the 11th, noting that the earnings decline is excessive. The target price was lowered from 140,000 won to 120,000 won, but the investment opinion remains "buy."
Kolmar Korea's revenue for the second quarter was 730.8 billion won, and its operating profit was 73.4 billion won, falling short of market expectations (consensus). Its major subsidiary, HK inno.N, also experienced a decline in performance due to a recall in the beverage institutional sector. By country, sales in China saw a decrease in the proportion of sun care products, leading to an operating profit of 6.1 billion won, a 5% decrease from the previous year, while in the United States, a lack of orders from the top client resulted in an operating loss.
The limited increase in the proportion of sun care products during the summer peak season also impacted the poor performance. The proportion of sun care products in the second quarter was 33%, similar to the previous year. However, if the sales of sun care products continue into the second half and the overseas expansion of skincare brands accelerates, a slight recovery in stock prices is anticipated.
Park Jong-hyun, a researcher at DAOL Investment & Securities, said, "With the conclusion of the business review of major clients, an expansion in the proportion of sun care products is expected," and noted, "With the construction of additional dedicated lines for some clients, an increase in production capacity and revenue is also anticipated."