Bullink Portfolio Report: Anticipating Earnings Surprises for Peak Season 1Q25
1Q25 Performance Review: Surprises from Korea, China, and the US Markets
Kolmar Korea has delivered an impressive performance in the first quarter of 2025, significantly surpassing market expectations. The company's revenue reached KRW 653.1 billion, marking a 14% year-over-year growth, while operating profit soared by 85% year-over-year, tallying KRW 59.9 billion. The stunning growth demonstrates robust operating leverage across key regions—Korea, China, and the US.
-
Korea's Contributions: Kolmar Korea's domestic sales ascended to KRW 274.3 billion, an 11% year-over-year increase, predominantly propelled by the heightened demand for sun care products spearheaded by indie brands. As older legacy brands experience a decline, newer sun care products have emerged as key growth drivers. As we head into Q2, the peak season for sun care, we are witnessing growing order volumes for notable brands, indicating an expected upsurge in top-line growth. Notably, the Hero SKU mix has played a pivotal role in elevating operating margins to a record 12.4% in Q1.
-
China's Turnaround: Despite China's previous underperformance, the first quarter showcased a solid rebound with sales reaching KRW 41.6 billion (up by 20% YoY) and an operating profit increase of 72% YoY, accounting for KRW 3.1 billion. This turnaround aligns with renewed sun care orders following past unit price disputes. We anticipate continued growth fueled by replenished orders from significant customers.
-
US Market Gains: The US has maintained its momentum with remarkable sales growth of 210% year-over-year, totaling 21.7 billion won, and a positive swing in operating profit of 1.5 billion won, up 300 million won quarter-on-quarter, with an impressive operating margin of 6.9%. The successful onboarding of new products and securing base makeup customers have bolstered profitability, achieving meaningful margins for two successive quarters.
Investment Outlook: Strong Earnings and Valuation Prospects
Kolmar Korea's stock is presently buoyant due to momentum within the sun care segment and favorable valuation trends, particularly noticeable in the US market. The sun care division is experiencing a full order book in alignment with its peak season, with anticipated record-setting margins in Q2 domestically. Simultaneously, a second production plant in the US is projected to be operational by June, capturing considerable client interest for onshore manufacturing—a response to evolving tariff policies. Given the positive sales trajectory for both Plant 1 and Plant 2, we have revised our US revenue forecast for 2025 upward, now estimating between KRW 80 billion and KRW 90 billion.
Considering improved financial estimates for 2025, including a domestic operating margin forecast at 12.5%, we are accordingly adjusting our price target to KRW 110,000, up from KRW 92,000. Valuation metrics remain compelling, exemplified by the stock's current trading levels at 14x 12-month forward price-to-earnings ratio. Consequently, a 'Buy' recommendation endures.
This enhanced report aligns with your expertise strategy, emphasizing comprehensive insights on market performance, strategic growth areas, and investment potential tailored for engagement from well-versed investors in the stock and cryptocurrency domains.
