NH Investment & Securities on the 24th said COSMAX is expected to see a gradual improvement in its margin structure, including a recovery in profits and losses at overseas subsidiaries. It maintained a "Buy (BUY)" recommendation and raised the target price to 240,000 won. COSMAX's closing price in the previous session was 189,900 won.
COSMAX's recent results met the consensus (the market's average forecast). In the fourth quarter of last year, COSMAX's consolidation basis revenue rose 8% on-year to 601 billion won, and operating profit increased 3% to 40.9 billion won.
China revenue climbed 17% on-year to 181.4 billion won, with Shanghai up 23% and Guangzhou up 9%. Shanghai is seeing rising demand centered on major clients and joint sales synergies. Guangzhou benefited from strong sales of a JV skincare brand, and in Indonesia transactions, the share of exports bound for Southeast Asia increased.
U.S. revenue rose 24% on-year to 37 billion won, with customer diversification in the West having a positive impact. As a result, the operating loss narrowed to 2 billion won.
Jeong Ji-yun of NH Investment & Securities said, "In the fourth quarter of last year, the China subsidiary recovered quarterly revenue in the 180 billion won range for the first time in four years, and the U.S. subsidiary's operating loss narrowed to around 2 billion won," adding, "Going forward, meaningful profit-and-loss recovery at overseas subsidiaries and improvements in the margin structure at the separate entity will reduce earnings volatility."