KB Securities analyzed Kolmar Korea on the 9th. It kept a "Buy" investment opinion and raised the target price to 115,000 won from the previous 96,000 won. Kolmar Korea's closing price in the prior session was 76,800 won.
Son Min-young, an analyst at KB Securities, said, "We present Kolmar Korea as a key stock in the cosmetics original design manufacturing (ODM) segment," and noted, "It is time for the solid growth of Kolmar Korea's separate entity and its global status as a representative ODM of Korean cosmetics to be reflected in the share price."
Son saw ample room for a valuation (corporate value) re-rating, given Kolmar Korea's outlook for earnings and profitability improvement.
The first basis for this positive outlook is Kolmar Korea's competitiveness in the sunscreen segment.
Son explained, "Kolmar Korea has strong manufacturing competitiveness in this segment, with more than 70% of orders concentrated in sunscreen and skin care," adding, "As skin care and sunscreen products continue to lead K-beauty exports in the global market, direct benefits are expected from the increase in exports by domestic cosmetics brands."
Kolmar Korea, together with Goodai Global, developed the "Beauty of Joseon Relief Sun: Rice + Probiotics" in 2021, which ranked No. 1 in the sunscreen category on Amazon in the United States during Black Friday. In addition, domestic indie brands such as Round Lab, which incorporate Kolmar Korea's technology, are achieving results in global markets.
Receiving orders from global multinational corporations (MNCs) was also cited as a factor for improving profitability.
Son said, "It is significant that the company received orders for flagship skin care products from a global MNC," and evaluated, "This is a case showing that the manufacturing prowess of domestic ODM corporations is recognized even by traditional powerhouses in cosmetics."
He added, "MNC orders are highly likely to lead to profitability improvement for Kolmar Korea, as they increase volumes and make it possible to secure a high average selling price (ASP)."