Earnings Surprises Await for Peak Season: A BULLINK Portfolio Example

1Q25 Review: Korea, China, and US Surprises

In the dynamic world of cosmetics manufacturing, Kolmar Korea has unequivocally set the benchmark high. The company's first quarter of 2025 delivered results that exceeded market expectations—a pivotal point in our outlook for the peak sun care season.

Key Performance Metrics:

• Revenue: KRW 653.1 billion (+14% YoY)
• Operating Profit: KRW 59.9 billion (+85% YoY)

Regional Highlights:

1. Domestic Market (Korea):

   • Sales: KRW 274.3 billion (+11% YoY)
   • Growth Drivers: Emerging dominance of indie sun care brands. With older legacy brands anticipating a reduction in influence (predicted shrinkage to 10% vs. 40% historically), the indie brands have captured consumers’ attention.
   • Margins: Strongest in Q1 with an operating margin of 12.4% due to an optimized product mix.

2. China:

   • Sales: KRW 41.6 billion (+20% YoY)
   • Operating Profit: KRW 3.1 billion (+72% YoY, OPM 7.5%)
   • Turnaround Factors: Revitalized sun care orders following previous negotiation hurdles, leading to renewed growth momentum.

3. United States:

   • Sales: KRW 21.7 billion (YoY +210%)
   • Operating Profit: KRW 1.5 billion (positive trend, QoQ +300 million won, OPM 6.9%)
   • Catalysts: High demand from key customers and the acquisition of new base makeup clients, alongside the strategic addition of new products, bolstered performance.

Strategic Implications:

Kolmar Korea is strategically positioned with robust growth via two synergistic factors: powerful sun care market momentum and enhancing production capabilities in the US, where a second plant is nearing completion in June. This will significantly bolster onshore production capabilities, especially given developments in trade policies.

Revised Financial Projections:

• US Revenue Target 2025: Increased to KRW 90 billion from KRW 80 billion based on robust plant performance forecasts.
• Target Price: Revised upwards to KRW 110,000 from KRW 92,000, driven by anticipated domestic OPM increases (12.5%) and heightened industry valuations.

Investment Thesis:

Kolmar Korea demonstrates compelling investment opportunities through innovative market adaptations and geographical expansions. Trading at a relatively modest 14x 12FM PER, the stock is poised for continued buying interest. The fiscal outlook, combined with operational efficiencies and expansionary policies, projects significant value realization for stakeholders.

This article transformation into the BULLINK portfolio format highlights Kolmar Korea's strategic operational strengths and market opportunities, making it an appealing prospect for investors attuned to the dynamics of the sun care product market and the broader cosmetics industry.