Korea Investment & Securities said on the 1st that cosmetics export data is expected to recover gradually for SILICON2 and that the current share price is at an attractive level. It raised its target price to 60,000 won from the previous 53,000 won while maintaining a "buy" recommendation. SILICON2's closing price in the previous trading day was 45,800 won.
Korea Investment & Securities estimated SILICON2's third-quarter sales and operating profit this year at 310.4 billion won and 63.2 billion won. That would be increases of 66.3% and 48.4%, respectively, from a year earlier.
Kim Myung-ju, an analyst at Korea Investment & Securities, said, "Despite recent market concerns, the outlook for U.S. cosmetics corporations in the second half of this year is solid," and added, "Since the third quarter of last year, SILICON2's U.S. sales, which had been weak, have recently shown signs of recovery."
Earlier, cosmetics corporations posted disappointing second-quarter results, and cosmetics export data was weak even in August, dampening investor sentiment for the sector as a whole. In particular, the slower recovery in Poland's export data is weighing on SILICON2's share price.
Kim explained, "Because SILICON2 sells products from its Poland logistics center to various countries across Europe, it will be harder to run down inventory quickly in the early stages of expansion than in a single country like the United States." However, he drew a line, saying that while export data may temporarily look weak during the inventory drawdown, it is excessive to link that to weak European sales for SILICON2.
Kim said, "SILICON2's 12-month forward price-earnings ratio (12MF PER) is 14 times, and it is trading at a valuation at an attractive level."
He added, "With the gradual recovery in cosmetics export data highlighting valuation appeal, SILICON2's share price is expected to maintain a solid trend."