BULLINK Portfolio Report: Earnings Surprises Await for Peak Season
Market Analysis: 1Q25 Review – Korea, China, and the US
Performance Highlights: Kolmar Korea
-
Revenue & Profit Surge:
Kolmar Korea delivered impressive 1Q25 figures, exceeding market projections with a revenue of KRW 653.1 billion (+14% YoY) and an operating profit of KRW 59.9 billion (+85% YoY). This reflects robust growth and operational efficiency across key markets like Korea, China, and the US. -
Domestic Growth Drivers:
Domestic sales recorded KRW 274.3 billion (+11% YoY), primarily fueled by sun care indie brands outpacing top legacy brands. As legacy brands dwindle to an estimated 10% of sales, sun care orders increase ahead of Q2's peak season, projecting an accelerated revenue trajectory. Strong product mix optimization resulted in an operating margin of 12.4%—a record for Q1.
International Market Surprises:
-
China's Unexpected Boost:
Despite previous underperformance, China's market bounced back with sales of KRW 41.6 billion (+20% YoY) and an operating profit of KRW 3.1 billion (+72% YoY, OPM 7.5%). This resurgence is attributed to revived sun care orders, which are poised to continue in the upcoming quarters. -
US Growth Trajectory:
The US solidified its growth narrative with sales reaching 21.7 billion won (+210% YoY) and a positive operating profit of 1.5 billion won, marking a continuous improvement with a QoQ rise of 300 million won (OPM 6.9%). The expansion of customer bases and product lines, alongside operational stability, underscores a profitable outlook for consecutive quarters.
Investment Outlook: Attractive Earnings and Valuation
-
Sun Care Momentum & Valuation Dynamics:
The surge in sun care orders during the peak season enhances domestic performance expectations for Q2, projecting record-breaking margins. In parallel, US market prospects are bolstered by the imminent completion of a second plant in June, facilitating increased production capacity and strategic partnerships following recent tariff policies. We adjust our US revenue forecast upwards to KRW 90 billion from KRW 80 billion for 2025. -
Price Target Revision:
Reflecting enhanced domestic operating margins (forecasted at 12.5% for 2025) and favorable industry valuation multiples, we revise our price target for Kolmar Korea from KRW 92,000 to KRW 110,000. The stock is trading at a reasonable 14x 12FM PER, presenting an advantageous entry point for investors. Our recommendation remains a strong 'Buy'.
Conclusion and Recommendation
Kolmar Korea's stellar 1Q25 performance and forward-looking strategies across key markets position the company favorably for sustained revenue and profit growth. Investors are advised to capitalize on the stock's current valuation and anticipated growth trajectory in the thriving sun care sector and broadened operational footprint in the US.
