BULLINK Portfolio Report: Earnings Surprises and Strategic Insights
Earnings Surprises Await for Peak Season
1Q25 Review: Surprising Outcomes Across Korea, China, and the US
Company Spotlight: Kolmar Korea
Market Performance:
- Revenue: KRW 653.1 billion (+14% YoY)
- Operating Profit: KRW 59.9 billion (+85% YoY)
Kolmar Korea outperformed market expectations in Q1 2025, demonstrating noteworthy revenue growth and operational efficiency across its primary business sectors in Korea, China, and the United States.
Regional Performance Breakdown:
1. Korea:
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Domestic Revenue: KRW 274.3 billion (+11% YoY)
The growth in this region was primarily fueled by the rapid expansion of indie sun care brands, which significantly outperformed legacy brands. Q2 is anticipated to further bolster this trend, marking the peak season for sun care. Anticipating a shift, legacy brands are expected to decline from a 40% to a 10% share, enhancing the company's overall brand portfolio.
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Operating Margin: 12.4% (Strongest Q1 Margin)
2. China:
- Revenue: KRW 41.6 billion (+20% YoY)
- Operating Profit: KRW 3.1 billion (+72% YoY, OPM 7.5%)
Despite a previous slump due to pricing negotiations in sun care, renewed demand has led to substantial growth. Orders are expected to increase steadily.
3. United States:
- Revenue: KRW 21.7 billion (+210% YoY)
- Operating Profit: KRW 1.5 billion (Positive YoY, QoQ addition +KRW 300 million, OPM 6.9%)
Sales surged, driven by robust orders from key and new base makeup customers, marking a pivotal profit enhancement that has continued for a second consecutive quarter.
Strategic Insights & Investment Appeal
Kolmar Korea is capitalizing on strategic sun care positioning and market valuation in the U.S. The ongoing sun care order momentum hints at a record margin in the upcoming Q2. With the upcoming June completion of a second U.S. plant and demand shifts due to tariff policies, Kolmar Korea's U.S. revenue forecast for 2025 has been upgraded from KRW 80 billion to KRW 90 billion.
Valuation Update:
- Price Target Revision: Raised to KRW 110,000 from KRW 92,000
- Justification: Reflects optimistic future domestic operating margin (12.5%) and higher industry valuation multiples.
Currently trading at a 14x 12FM P/E ratio, the stock offers an advantageous buying opportunity. The company's focus on enhancing its sun care segment and strategic regional expansions underscores a compelling investment case.
Analyst Note:
Continued focus on adaptability and leveraging regional strengths will be pivotal for sustaining the current growth trajectory. Keeping an eye on macroeconomic factors influencing consumer behavior in these markets will be essential in adjusting strategies effectively.
BULLINK Portfolio Summary:
Kolmar Korea remains a compelling buy for investors seeking to capitalize on sector strength and strategic market positions. The company's robust first-quarter performance positions it well for future earnings and market leadership.
Disclaimer: This report is for informational purposes only and should not be construed as financial advice. Please consult with a financial advisor before making investment decisions.
