DB Securities said on the 10th that short-term earnings uncertainty for Kolmar Korea is expanding and its share price is likely to be sluggish for the time being. It maintained its buy rating while lowering the target price to 100,000 won from 130,000 won. The previous trading day's closing price of Kolmar Korea was 72,100 won.
Heo Jena, a DB Securities researcher, said, "For the domestic corporation, it is positive that dependence on legacy brands is declining, but it is regrettable that earnings visibility is deteriorating as some clients adjust inventory and fluctuations in orders widen," and noted, "The U.S. corporation also has not been securing clients smoothly, making an expansion of short-term fixed-cost burdens inevitable, so operating losses will continue."
Earlier, Kolmar Korea announced on the 7th that on a consolidation basis it posted sales of 683 billion won and operating profit of 58.3 billion won in the third quarter of this year (July–September). While each figure rose 9% and 6.9% from a year earlier, operating profit fell short of the market consensus (68 billion won).
Heo saw that a wider loss at the U.S. corporation led overseas units to record a larger-than-expected operating loss. Orders plunged as sales of a key product for the largest client of Plant 1 were sluggish, and volumes planned for production at Plant 2 also did not lead to firm contracts, the analysis said. Heo explained, "We assess that domestic clients' strategy to shift production to the U.S. corporation also did not translate into production as the tariff issue eased."
At the same time, Heo projected fourth-quarter (October–December) sales of 618.5 billion won on a consolidation basis and an operating loss of 47.1 billion won. Heo said, "Volumes that were scheduled to ship in October were shipped early in September, and as supply of strategic products for a global MNC next year has been decided, some line allocations are being readjusted, delaying shipments for other clients," and added, "With inventory adjustments at a global client with a high share of skincare added on, fourth-quarter shipment volume will decline."