Bullink Portfolio Report: Earnings Surprises Await for Peak Season
1Q25 Review: Kolmar Korea's Exceptional Performance Across Key Markets
Kolmar Korea set a benchmark in the first quarter of 2025, outperforming market expectations with impressive financial results across Korea, China, and the US.
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Korea: In its domestic market, Kolmar Korea achieved revenue of KRW 274.3 billion, marking an 11% year-on-year growth. This growth was fueled by the robust performance of sun care indie brands, which are gaining traction over the declining legacy brands. As we enter Q2, peak sun care season, the company is poised to capture increased market share with estimated sales distribution of indie brands rising sharply as legacy brands diminish to 10% from a previous 40%. This resulted in an operational margin surge to 12.4%, the strongest recorded in any Q1 for the company.
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China: Despite historical challenges, the China segment surprised with a 20% year-on-year sales increase, reaching KRW 41.6 billion. The operating profit also escalated by 72% to KRW 3.1 billion, driven by renewed sun care demand as pricing disputes subsided. The outlook remains positive with expectations of continued order volume growth.
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US: The US market exhibited remarkable expansion with sales skyrocketing by 210%, standing at KRW 21.7 billion. The operational profit turned positive, reflecting a quarter-on-quarter increase of KRW 300 million to an OPM of 6.9%. This growth was bolstered by strategic acquisitions of new base makeup customers and a successful order intake from key players. The company anticipates building on these margins in upcoming quarters.
Strategic Implications & Valuation Uplift
Kolmar Korea’s stock is energized by a dual driver strategy — robust sun care performance and strategic US expansion. The anticipated completion of the second US plant by June, alongside burgeoning onshore production opportunities post-tariff policy, supports a firm upward adjustment of US revenue forecasts to KRW 90 billion for 2025.
In line with these enhanced estimates and an anticipated domestic OPM of 12.5%, we have revised our price target to KRW 110,000 from KRW 92,000. At a trading level of 14x 12FM PER, the stock remains attractively priced, maintaining our 'Buy' recommendation.
Examples of Strategic Excellence in Industry:
The sun care sector is not the only area witnessing such dynamic growth and strategic shifts. Market parallels can be observed in companies like L'Oréal, which capitalizes on seasonal product lines and agile market adaptation, or Tesla's strategic expansion into emerging markets positioning them as not just responsive, but proactive market leaders. These organizations' adaptability and market foresight mirror the strategic initiatives currently elevating Kolmar Korea in a competitive global landscape.
Conclusion
Kolmar Korea's Q1 results and strategic trajectory underscore a potent combination of operational excellence and forward-looking market strategies. As the company navigates peak seasonality and capitalizes on cross-regional market dynamics, stakeholders can remain optimistic about sustained growth and value creation.
This Bullink format converges comprehensive financial insights with strategic foresight, enhancing decision-making for stakeholders and aligning with dynamic market trends.
