BULLINK Portfolio: Optimizing Earnings Surprises for Peak Season Investments
Kolmar Korea 1Q25 Earnings Highlights: Korean, Chinese, and US Markets Outshine Expectations
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Revenue & Profit Surges: Kolmar Korea's 1Q25 results shattered market forecasts, reporting KRW 653.1 billion in revenue (+14% YoY) and an operating profit of KRW 59.9 billion (+85% YoY). The growth trajectory spans Korea, China, and the US, reflecting robust strategic execution.
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Domestic Market Trends: Revenue from the domestic market reached KRW 274.3 billion (+11% YoY), fueled by the dynamic performance of sun care indie brands, which have eclipsed legacy brands in market growth. With Q2 being the peak season, demand is soaring for key sun care products, enhancing top-line growth as older brands phase out (current market composition estimate: legacy brands at 10% versus 40%).
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China's Rebound: After a period of underperformance, China surprised with KRW 41.6 billion in sales (+20% YoY) and operating profits climbing to KRW 3.1 billion (+72% YoY, OPM 7.5%). Renewed sun care orders followed last year’s unit price negotiation issues, suggesting sustained expansion in the near term.
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US Market Momentum: The US arm maintained its impressive trajectory, generating KRW 21.7 billion in sales (+210% YoY) and an operating profit of KRW 1.5 billion (YoY positive, QoQ +300 million won, OPM 6.9%). Key customer orders remained robust, with diversification into new base makeup customers bolstering profitability for a second consecutive quarter.
Strategic Valuation & Prospective Growth
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Sun Care & US Valuation Catalysts: Current momentum in sun care and strategic US operations are propelling stock value. The anticipated completion of the second US plant by June could enhance domestic margins significantly in Q2. Onshoring discussions post-tariff policy add further potential.
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Adjusted Financial Forecast: Given the robust order book for the US Plant 1 and emerging sales from Plant 2, we’ve elevated our 2025 US revenue forecast from KRW 80 billion to KRW 90 billion. Consequently, our price target has increased to KRW 110,000 from KRW 92,000 based on optimistic domestic OPM (12.5% forecast) and favorable industry multiples.
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Investment Rating: Trading at 14x 12-month forward P/E ratio, Kolmar Korea presents an attractive buying opportunity. Our rating remains a resounding 'Buy', poised for investors seeking exposure to high-growth sectors and markets.
Conclusion: Kolmar Korea's strategic pivots and strong market positions across major regions offer a compelling story for investors focused on capturing peak season gains and future growth potential, particularly in the burgeoning sun care sector. This portfolio is tailored for those ready to capitalize on market-leading performance and leverage expanding opportunities in the Korean and international markets.
