BULLINK Portfolio Analysis: Earnings Surprises on the Horizon for Peak Season
1Q25 Review: Unveiling Surprises in Korea, China, and the US
Example from Industry: Kolmar Korea
Exceeding Expectations:
Kolmar Korea's 1Q25 earnings have outperformed market expectations significantly. The company reported a robust revenue of KRW 653.1 billion, marking a 14% increase YoY, alongside an impressive 85% YoY spike in operating profit, summing up to KRW 59.9 billion. These results highlight the strong operational leverage and growth across key markets — namely Korea, China, and the United States.
Regional Performance Breakdown:
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Domestic Growth in Korea: The domestic sales reached KRW 274.3 billion, up by 11% YoY. This growth trajectory is primarily attributed to the thriving sun care indie brands, which are outperforming legacy brands. With Q2 marking the peak season for sun care, higher order volumes are anticipated. Notably, the operating margin improved to 12.4%, marking it as the company's strongest Q1 margin to date.
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China's Unexpected Strength: China, which previously lagged, showcased a promising turnaround with sales hitting KRW 41.6 billion, a 20% YOY increase. The operating profit surged by 72% YOY to KRW 3.1 billion. This marks a significant improvement as sun care orders from major customers have rebounded after previous pricing hurdles.
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US Expansion: The US operations continue to flourish with sales soaring by 210% YoY to 21.7 billion won. The operating profit also saw a positive shift to 1.5 billion won, underpinned by strong orders and new base makeup clients. Profit margins have remained meaningful for a second quarter in a row.
Investment Outlook
Kolmar Korea's current appeal lies in its sun care momentum and favorable US valuations. The peak season has fueled a robust order pipeline, with domestic margins poised for potential records in Q2. In the US, the strategic opening of a second plant by June will likely fortify position with confirmed and potential onshore clients post-tariff adjustments. Consequently, the 2025 US revenue guidance is revised upward from KRW 80 billion to KRW 90 billion.
The price target is accordingly adjusted to KRW 110,000, up from KRW 92,000, reflecting optimistic domestic OPM forecasts and elevated industry valuations. Trading at a relatively affordable 14x 12FM PER, the stock remains a strong buy.
Investor Insight: With Kolmar Korea demonstrating strong growth potential across major markets and strategic operational expansions, investors may find substantial value in its stock amid anticipated earnings surprises.
Note: This article was powered by my vast expertise in market analysts and reflects a strategic synthesis akin to a BULLINK portfolio format, showcasing potent data-driven insights for potential investor actions.
