Hana Securities on the 20th initiated coverage of d'Alba Global(483650), saying it is maintaining strong growth led by overseas markets, with a "buy (BUY)" rating and a new target price of 260,000 won.
Park Jong-dae of Hana Securities said, "d'Alba Global is expanding its product lineup beyond the global success of its mist serum to include sunscreen and multi balm," adding, "By broadening its business scope to DEVICE and inner beauty, and even sub-brands, it could grow into a cosmetics multi-brand corporations."
d'Alba Global posted consolidated second-quarter revenue of 186.9 billion won and operating profit of 47.2 billion won. Those figures were up 46% and 62%, respectively, from a year earlier. Operating profit topped the market consensus of 41.3 billion won.
Growth slowed somewhat in Korea and Russia due to factors such as container shortages, but growth in overseas markets offset that. Revenue in Japan rose 39% from a year earlier, while revenue in North America and Europe surged 174% and 240%, respectively.
In particular, the expansion of overseas offline distribution networks helped boost results. The number of overseas offline stores reached about 9,607, up 3,539 from a year earlier. In Europe and ASEAN, TikTok Shop sales also appeared to increase sharply.
Profitability also improved. Thanks to more efficient marketing expense and operating leverage from higher sales, the second-quarter operating margin came in at 25.3%, up 2.5 percentage points from a year earlier. The share of overseas B2B revenue also rose to 39%, up 4 percentage points from a year earlier.
Park predicted that profitability would improve even more in the second half. That is because, as the Korean and Russian markets normalize, marketing expense efficiency and overseas B2B sales expansion are expected to continue. He projected the B2B sales share would rise from 37% last year to more than 40% this year.
He said, "The second-half operating margin will rise by 2 to 3 percentage points from a year earlier, pushing operating profit growth rate to 75%," adding, "Profitability management by region is also being strengthened."
New businesses and regional expansion were also cited as growth drivers. The recent investment in the perfume brand "Kuoka" could serve as an opportunity to expand brands and categories beyond cosmetics, and the establishment of a subsidiary in China was also seen as positive in terms of entry into a new market.
Park said, "d'Alba Global, after its cosmetics success, is preparing to launch DEVICE and inner beauty products and sub-brands," analyzing that "it is in the process of shifting from a single-hit product corporations centered on mist serum to a multi-brand corporations."
d'Alba Global also raised its full-year guidance. The company set this year's revenue guidance at 725 billion won, up 25 billion won from before, and targeted an operating margin of 21%. For the third quarter, it projected revenue of 170 billion won and an operating margin of 17%.
Park assessed the company's guidance as relatively conservative. He said, "The current share price is at about 17 times 12-month forward price-earnings ratio (PER)," adding, "It will likely extend its share-price uptrend while maintaining its valuation gap with competitors."