Korea Investment & Securities Co. said on Apr. 2 that although market interest in the cosmetics sector has recently waned, the current valuation level looks attractive when this year's earnings are considered. It maintained a target price of 110,000 won and a "buy" rating. Kolmar Korea's closing price in the previous trading day was 78,600 won.
Korea Investment & Securities Co. estimated Kolmar Korea's first-quarter consolidated revenue and operating profit this year at 719.9 billion won and 64.4 billion won. Those represent increases of 10.2% and 7.5%, respectively, from a year earlier. While revenue at Kolmar Korea's Korea subsidiary is expected to rise more than 20% from the previous quarter, the U.S. subsidiary is projected to post an operating loss of 6.6 billion won.
Kim Myeong-ju, an analyst at Korea Investment & Securities Co., said, "This year, the business conditions in the cosmetics industry are more solid than investors fear." Cosmetics exports in Jan.–Mar. rose 19.1% from the same period a year earlier, and competition intensification and consumer slowdown in the U.S. cosmetics market are not worsening compared with last year, Kim noted.
Kim said, "Fortunately, the popularity of Korean cosmetics is rising quickly in Europe, so unless the war between the United States and Iran drags on, exports of Korean cosmetics should remain solid."
Kolmar Korea's share of direct exports in sales is smaller than competitors', and the expectation that it will begin narrowing this gap this year is a positive.
Kim said, "It is regrettable that market interest in the cosmetics sector is limited due to fund flows concentrating in certain sectors, but Kolmar Korea's earnings this year are sound, and the valuation level is also good."
Kim added, "At this point, we see no production disruptions due to the war," but said, "If the war becomes prolonged, Kolmar Korea could face difficulties because cosmetics production uses products that employ petrochemical raw materials."