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Strategic Thrivers: Earnings Surprises Await for Peak Season
Portfolio Review 1Q25: Strategic Gains in Korea, China, and the US
Kolmar Korea: Pioneering Growth and Earnings Dynamics
In an exhilarating turn of events, Kolmar Korea has outperformed market projections for 1Q25, securing revenue of KRW 653.1 billion (+14% YoY) alongside an impressive operating profit surge of KRW 59.9 billion (+85% YoY). This triumph underscores Kolmar Korea’s strategic prowess across pivotal markets: Korea, China, and the United States.
Korean Market Success: A Sunlit Path
Domestically, Kolmar Korea posted sales of KRW 274.3 billion (+11% YoY), fueled by the burgeoning demand for indie sun care brands. As legacy brands decline, indie brands are filling the void with innovative products; thus, Kolmar Korea is strategically positioned as a market leader in the sun care segment. As Q2 heralds the peak sun care season, we anticipate an acceleration in top-line growth alongside an operational margin zenith of 12.4%, marking the most robust Q1 margin to date.
China: A Turnaround Tale
After periods of underperformance, Kolmar's Chinese market has dazzled with a sales rise of KRW 41.6 billion (+20% YoY) and an operating profit uptick of KRW 3.1 billion (+72% YoY, operating profit margin of 7.5%). The revitalization in sun care orders, prompted by resolution in unit price negotiations, has rekindled growth prospects which are expected to sustain momentum moving forward.
US Expansion: A Period of Prosperity
In the US landscape, Kolmar continues its momentum with sales reaching KRW 21.7 billion (a monumental YoY growth of +210%). Operating profits leapt to KRW 1.5 billion, maintaining profitability for the second consecutive quarter with a meaningful 6.9% OPM. Strategic client engagements, including new product lines and base makeup sectors, underscore a flourishing path of expansion and profitability.
Earnings Trajectory and Strategic Positioning
Kolmar Korea’s stock gains are buttressed by dynamic sun care growth and advantageous US valuations. With sun care orders brimming as peak season unfolds, domestic record margins in Q2 are on the horizon. Furthermore, the imminent completion of the second US plant in June positions the company to capture lucrative onshore production opportunities. Reflecting this, our US revenue guidance for 2025 is adjusted upwards from KRW 80 billion to KRW 90 billion.
Consequently, our price target is elevated to KRW 110,000 from KRW 92,000, aligning with revised earnings predictions (domestic OPM of 12.5% by 25F) and industry valuation multiples. At a modest 14x 12FM PER, Kolmar Korea remains a compelling buy, demonstrating affordability amid an upward trajectory.
This BULLINK-formatted portfolio report highlights strategic insights and market analyses while providing actionable forecasts and valuation perspectives, serving as an invaluable tool for informed investment decisions.
