SK Securities said on the 14th that retail demand at top client companies and cosmetics export momentum (upside potential) for Kolmar Korea Co. are showing strength. It raised its target price to 106,000 won from 95,000 won and maintained a "buy" rating. The previous trading day's closing price of Kolmar Korea Co. was 81,900 won.
SK Securities estimated that in the first quarter of this year, Kolmar Korea Co.'s revenue and operating profit will come in at 708.6 billion won and 68.5 billion won, up 8.5% and 14.2% year over year, respectively. Operating profit is higher than the market consensus of 65.9 billion won.
Hyeong Gwon-hun of SK Securities explained, "Unlike last year, the impact of declining sales to legacy brands has eased, and first-quarter traffic for top client companies such as d'Alba, Dr.Althea, Goodai Global, and Olive Young was generally strong."
There was also the effect of strong traffic for brands whose sales shares were relatively small last year, such as Centellian24 and Cellimax, centered on cream products manufactured by Kolmar Korea Co.
However, on a combined North America basis, revenue appears to have fallen 42% over the same period. Hyeong said, "While the impact of declining sales to the largest client of U.S. Plant 1 continues, the utilization recovery at Plant 2 is still," adding, "The China subsidiary likely saw revenue increase 15.4% on the inflow of new clients."
SK Securities assessed Kolmar Korea Co.'s sales growth and profitability as positive. Hyeong said, "As industry momentum strengthens again, it is an appropriate time to invest in original design manufacturing (ODM), where earnings and stock prices have high beta to industry changes."