Bullink Portfolio Report: Kolmar Korea – Earnings Surprises Await for Peak Season
1Q25 Review: Tri-Regional Earnings Surprises
Kolmar Korea showcased a robust performance in the first quarter of 2025, significantly exceeding market expectations. The company achieved a revenue milestone of KRW 653.1 billion, witnessing an increase of 14% year-over-year, with an impressive operating profit of KRW 59.9 billion, marking an 85% year-over-year surge.
Key Highlights by Region:
1. Korea
Domestic operations reported enhanced sales totaling KRW 274.3 billion, reflecting an 11% year-over-year growth. The surge was primarily fueled by the high-performing indie sun care brands, which surpassed the overall market growth, even as legacy brands experienced a decline. Notably, the sun care sector is entering its peak season in Q2, presenting a promising outlook for reinforced top-line growth. A strategic shift in product mix towards improved Sun Care and Hero SKUs elevated the operating margin to a record 12.4%, the highest Q1 margin in the company's history.
2. China
After a period of underperformance, China delivered a turnaround with sales soaring to KRW 41.6 billion, up 20% year-over-year, and operating profit improving by 72% to reach KRW 3.1 billion, with an OPM of 7.5%. The revival in sun care orders, previously hampered by unit price negotiations, is expected to maintain momentum, bolstering the regional performance in the near term.
3. United States
Continuing its trajectory of impressive growth, the U.S. division registered staggering sales of KRW 21.7 billion, a 210% increase year-over-year, and an operating profit of KRW 1.5 billion, marking a sequential growth of KRW 300 million with an OPM of 6.9%. Strong demand from key customers, coupled with new product launches and customer acquisitions in base makeup, bolsters the profitability outlook for the second quarter in succession.
Strategic Financial Outlook
Kolmar Korea is strategically positioned with strong sun care order momentum complementing the U.S. market valuation. Anticipating record domestic margins entering the Q2 peak season, the company is set to capitalize on the robust order flow. The U.S. growth trajectory remains optimistic with the upcoming completion of a second plant in June, driving increased onshore production amid strategic customer engagements post-tariff policy adjustments. Given this outlook, revenue guidance for the U.S. market in 2025 has been revised upwards from KRW 80 billion to KRW 90 billion.
Investment Thesis
Acknowledging the strengthened earnings forecasts and favorable industry dynamics, we are revising our price target for Kolmar Korea from KRW 92,000 to KRW 110,000. This reflects improved domestic OPM projections (12.5% forecast) and higher valuation multiples. The valuation at 14x 12-month forward price-to-earnings ratio remains attractive. We uphold our ‘Buy’ recommendation, underscoring Kolmar Korea's compelling growth potential and market positioning.
Disclaimer: This report is intended for informational purposes only and should not be construed as investment advice. Please conduct your own research or consult with a certified financial advisor.
