BULLINK Portfolio Report
Earnings Surprises Await for Peak Season
Market Review: Korea, China, and US Surprises
In the first quarter of 2025, Kolmar Korea astonishingly exceeded market expectations with robust financial results. The company's revenue soared to KRW 653.1 billion, marking a 14% increase year-over-year. This was complemented by a significant rise in operating profit, escalating by 85% YoY to KRW 59.9 billion. The positive performance was observed across key markets — Korea, China, and the United States.
In the domestic sector, Kolmar Korea achieved sales of KRW 274.3 billion, reflecting an 11% YoY growth. This surge was largely due to the remarkable performance of sun care indie brands, which significantly outperformed the traditional legacy brands that are witnessing a decline. With the peak sun care season in Q2, an increase in orders for key brands is evident, posing a potential for further revenue enhancement. Legacy brands are estimated to constitute merely 10% of the mix compared to 40% previously. Consequently, the sun care and Hero SKU mix propelled the operating margin to an unprecedented Q1 level of 12.4%.
While China had previously been underperforming, it reported an impressive turnaround with sales climbing 20% YoY to KRW 41.6 billion and an operating profit increase of 72% YoY to KRW 3.1 billion (Operating Margin of 7.5%). Past challenges concerning unit price negotiations that hampered orders have improved, offering optimism for sustained sun care order expansions.
In the United States, Kolmar Korea sustained its growth momentum, showcasing a monumental 210% YoY increase in sales to KRW 21.7 billion. The operating profit also turned positive, advancing by KRW 300 million QoQ to KRW 1.5 billion (Operating Margin of 6.9%). This gain was driven by strong orders from key customers and the acquisition of new base makeup clients. Profitability shows a promising upward trend for the second straight quarter.
Earnings and Valuation Insights
Kolmar Korea’s stock market performance is fueled by robust sun care operations and favorable valuations in the US market, both contributing positively. During peak season, the sun care division is flourishing, anticipating record margins domestically for Q2. In the US, growth prospects are further enhanced by the anticipated completion of the second plant in June, amid active negotiations for onshore production arising from recent tariff policy changes. With the confirmed orders for Plant 1 and promising sales forecasts for Plant 2, we have increased our 2025 US revenue guidance from KRW 80 billion to KRW 90 billion.
Resultantly, the price target has been elevated from KRW 92,000 to KRW 110,000 reflecting the refined estimates for domestic operating margins (forecast at 12.5% for FY25) along with improved industry valuation multiples. The stock presently trades at a favorable 14x 12-month forward P/E ratio, reinforcing its buy rating.
Note: This BULLINK portfolio report distills key financial insights and market analysis for investors and stakeholders, underscoring Kolmar Korea’s strategic market positioning and prospective growth trajectory.
