Shinyoung Securities said on the 16th that Kolmar Korea(161890) will post a record-high quarterly operating margin, helped by entering the summer sun care peak season and sales from hit skin care products. It maintained a "buy" recommendation and raised its target price to 140,000 won from 120,000 won. The previous session's closing price was 107,200 won.
Shinyoung Securities projected that Kolmar Korea's second-quarter standalone revenue this year will be 416.7 billion won, up 27% from a year earlier, and operating profit will be 65.8 billion won, up 34%. The standalone operating margin is expected to reach 15.8%, a record high.
The primary driver of the earnings improvement is cited as the mass-production effect of sun care products from entering the seasonal peak and the steep growth of new indie brand clients.
Typically, sun care products, which have a small number of SKUs by brand, see production concentrated in the second quarter, and analysts said the profit-maximizing structure for cosmetics original development manufacturing (ODM) companies from mass-producing a single product will shine the most this quarter.
In particular, the expansion of the hit skin care category, which has recently stood out in the global market, is notable. Kolmar Korea's major client "The Pure Lab" raised its annual revenue target this year to 700 billion won from 500 billion won. As Kolmar Korea manufactures the entire volume of the brand's core product and Amazon hit, "345 Relief Cream," it is expected to enjoy direct benefits.
"Retinal Skin Booster Serum" by Meditherapy, which is growing rapidly after breaking into the U.S. Amazon Beauty top 100, is also produced by Kolmar Korea, and considering Black Friday volumes in the second half, steady growth is expected to continue in the third quarter.
The dominance of the sun care portfolio, which already has unrivaled technological prowess, has also strengthened. Beauty of Joseon's "Relief Sun: Rice + Probiotics," Round Lab's "Birch Juice Moisturizing Sun Cream," and Skin1004's "Centella Water-Fit Sun Serum," which make up the core hit sun care lineup at Olive Young U.S. and Amazon that triggered global sellouts, are all produced through Kolmar Korea.
It has also secured all sun cream orders from the top four domestic indie brands by sales, including APR (Medicube), Anua, and d'Alba Global, cementing its exclusive status.
Additional growth momentum in the U.S. market is also pending. As the regulatory easing (new inclusion) of "bemotrizinol," a UV filter in the U.S. over-the-counter (OTC) monograph, becomes visible, orders for sun care for U.S. exports from domestic indie brands are expected to surge.
An increase in direct orders to Kolmar's second U.S. plant, which is equipped with local automation facilities, is also anticipated. Last year, Kolmar Korea's U.S. OTC-related sun care sales were only about 10 billion won. However, if the benefits of regulatory easing kick in in earnest in the second half of this year, the pace of export acceleration is expected to outstrip other business areas.
Lee Gyo-seok, an analyst at Shinyoung Securities, said, "Kolmar Korea will enjoy the greatest benefits from U.S. market regulatory easing starting in the second half of this year, based on its overwhelming technological edge in sun care," adding, "Amid the strengthening recognition of K-beauty centered on skin care, the pace of sun care export expansion could be much steeper than expected."