Korea Investment & Securities Co. said on the 23rd that although COSMAX faces a better business environment than market concerns suggest, cost pressures could grow due to rising oil prices ahead. It lowered the target price by 10% to 270,000 won from 300,000 won while maintaining a "buy" rating. COSMAX's closing price in the previous session was 196,100 won.
Korea Investment & Securities Co. estimated that in the first quarter of this year, COSMAX's revenue on a consolidation basis will rise 13.3% on-year to 667.1 billion won, with operating profit up 12.3% to 57.7 billion won.
Kim Myeong-ju, an analyst at Korea Investment & Securities Co., said, "The Southeast Asia subsidiaries that continued from the second half of last year, especially Indonesia, will remain disappointing, with revenue down 9.1% on-year." The China subsidiary is expected to see first-quarter revenue increase 11.9% on-year due to joint sales performance among subsidiaries.
Kim said, "COSMAX's share-price performance lagged the market due to unfavorable supply-demand and the spillover from the cosmetics sector's somewhat disappointing fourth-quarter results versus expectations," adding, "Fortunately, the cosmetics industry's conditions this year are better than market worries." The revenue trends of COSMAX's major domestic and overseas clients are also seen as solid.
COSMAX's current share price is not burdensome considering its valuation. Kim said, "The China market remains COSMAX's upside risk," adding, "However, at this point, any significant expense increase or revenue decline from higher oil prices that is not yet evident could emerge if the war is prolonged, due to cost inflation and reduced purchases of non-essentials by consumers."