BULLINK Portfolio: Earnings Surprises Await for Peak Season
Overview: 1Q25 Review – Korea, China, and US Exceed Expectations
Key Highlights:
- Kolmar Korea showcased exceptional 1Q25 financial performance, outperforming market expectations.
- Revenue: KRW 653.1 billion (+14% YoY)
- Operating Profit: KRW 59.9 billion (+85% YoY)
- Notable growth in key regions: Korea, China, and the US.
Regional Performance Breakdown
1. Korea:
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Revenue: KRW 274.3 billion (+11% YoY)
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Driving Factors:
- Surge in popularity of sun care indie brands.
- Legacy brands diminishing, providing growth space for emerging indie brands.
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Outlook:
- Anticipate further top-line growth during peak sun care season.
- Projected Q2 margins to hit record levels at 12.4%, buoyed by improved product mix.
2. China:
- Sales Performance: KRW 41.6 billion (+20% YoY)
- Operating Profit: KRW 3.1 billion (+72% YoY, OPM 7.5%)
- Market Dynamics:
- Recovery in sun care orders post-negotiation hurdles.
- Indications of sustained growth momentum in sun care segment.
3. United States:
- Sales Surge: KRW 21.7 billion (YoY +210%)
- Profitability Growth: Operating profit stands at KRW 1.5 billion, marking a positive trend.
- Strategic Moves:
- Key customer acquisitions for new products.
- Secured base makeup customers.
- Consistent profitability improvement with strong margins.
Strategic Insights and Valuation
Current Market Position:
- Momentum Drivers: Robust sun care order flow and favorable US valuation metrics.
- Domestic Market: Anticipated record margins amidst peak demand.
US Market Expansion:
- Second Plant Completion: Forecasted by June, enhancing capacity.
- New Opportunities: Active engagements for onshore production post-tariff changes.
- Revenue Guidance: Raising US revenue forecast from KRW 80 billion to KRW 90 billion for FY25.
Investment Thesis:
- Price Target: Revised to KRW 110,000 from KRW 92,000, influenced by improved growth outlook and industry valuation benchmarks.
- Valuation: Trading at an affordable 14x 12FM PER, making it an attractive Buy.
Conclusion
Kolmar Korea's exceptional start to FY25 signals a promising trajectory of robust growth and profitability. This analysis highlights the strategic positioning and operational strengths across key markets. As the company leverages peak demand periods and expands its US operations, it is well-poised for continued upward momentum in both revenue and stock performance. Investors are advised to maintain a Buy position, capitalizing on the company's growth potential and market dynamics.
