BULLINK Portfolio Report: Earnings Surprises Await for Peak Season
1Q25 Review: Korea, China, and US Surprises
Kolmar Korea's Outstanding Performance
Kolmar Korea has defied market expectations with impressive growth in the first quarter of 2025. The company reported a revenue of KRW 653.1 billion, marking a 14% increase year-over-year (YoY). The operating profit surged by an astounding 85% YoY, reaching KRW 59.9 billion. This growth is attributed to strong performance across its major regions: Korea, China, and the US.
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Domestic Market Performance:
- Sales in Korea reached KRW 274.3 billion, an 11% YoY growth. This was largely driven by a surge in sun care indie brands, which are outperforming legacy brands that continue to decline in sales.
- Peak season for sun care is underway, and an uptick in orders is anticipated, enhancing top-line growth.
- Operating margin hit an all-time Q1 high of 12.4%, bolstered by an improved product mix.
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China’s Turnaround:
- Sales climbed to KRW 41.6 billion (+20% YoY) with an operating profit of KRW 3.1 billion (+72% YoY, OPM 7.5%).
- Sun care product demand is recovering following last year’s price negotiation disruptions, suggesting sustained growth in the near term.
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US Market Expansion:
- Exhibited remarkable growth with sales surging to 21.7 billion won—a 210% increase YoY.
- Operating profit turned positive with an OPM of 6.9%, supported by robust demand and securing of new customers.
Strategic Valuation and Projections
Kolmar Korea’s stock position remains robust due to the thriving sun care sector and strategic valuation moves in the US. The ongoing peak season is anticipated to push domestic margins to new heights in Q2. The completion of a second manufacturing plant in the US by June is expected to bolster production and cater to a growing customer base influenced by tariff changes.
- Revised Guidance and Target:
- U.S. revenue guidance has been adjusted from KRW 80 billion to KRW 90 billion due to strong sales projections.
- The price target has been raised to KRW 110,000 from KRW 92,000, reflecting the improved operating profit margin forecasts (25F domestic OPM of 12.5%) and higher industry valuation multiples.
Investment Outlook
Kolmar Korea's momentum in sun care and solidifying footprint in the US present a compelling investment case. Trading at 14x 12-month forward PER, the stock offers an attractive entry point. We maintain a buy rating, given the upward trajectory in earnings and market developments.
Note: This portfolio report aims to provide a comprehensive overview of Kolmar Korea’s recent performance and strategic outlook. Investments should align with individual risk tolerance and financial goals.
