DB Securities said on the 11th that, for Kolmar Korea, earnings growth remains intact and the valuation (price level relative to earnings) is still attractive. It kept its investment opinion at "Buy" and raised the target price to 130,000 won from 100,000 won. Kolmar Korea's closing price in the prior session was 93,600 won.
Kolmar Korea posted consolidated first-quarter sales of 728 billion won and operating profit of 78.9 billion won this year. Sales rose 11.5% and operating profit increased 31.6% from a year earlier.
Heo Jena, an analyst at DB Securities, said, "At the domestic subsidiary, orders centered on skin and sun care products increased as top-tier clients expanded their export volumes," and noted, "At the U.S. subsidiary as well, orders from the largest client recovered compared with the second half, and the operating loss narrowed far more than expected."
Considering the first-quarter results, some also say second-quarter results could grow further.
Heo said, "The strong first-quarter results reflect a pronounced trickle-down effect as export volumes to the United States and Europe by clients ranked within the top 10 of domestic subsidiary sales surged," adding, "In particular, volumes of new products from global brands were reflected in sales at a meaningful scale starting this quarter, and this is expected to serve as a factor that raises expectations for future earnings."
Kolmar Korea raised its second-quarter domestic subsidiary sales growth rate guidance by 20%.
Heo said, "Based on strong top-line growth, improvement in the operating margin above the first-quarter level is expected to continue."
The key to expectations for earnings growth was cited as the growth of the domestic subsidiary. It is also positive that the performance of the U.S. subsidiary, which had been a company risk factor, is recovering gradually.
Heo said, "It is positive that not only sun products (sun care products) but also orders for core skin care products, on which existing top-tier clients are focusing their exports, are continuing strongly," adding, "The environment allows operating leverage to be fully realized, and the company has both earnings growth and undervaluation appeal."