BULLINK Portfolio Report: Earnings Surprises & Strategic International Partnerships
Earnings Surprises Await for Peak Season
1Q25 Review: Notable Performances in Korea, China, and US
In the first quarter of 2025, Kolmar Korea has taken the market by surprise. Their impressive earnings report reveals success in core markets—Korea, China, and the US. Revenue was reported at KRW 653.1 billion, showing a 14% year-over-year growth, while operating profit surged by 85% to reach KRW 59.9 billion. These numbers are indicative of Kolmar Korea's robust business model and effective operating leverage in key regions.
Korea's Domestic Market
Domestic sales contributed KRW 274.3 billion (+11% YoY), primarily pushed by sun care indie brands that are gaining market share as older legacy brands taper. With Q2 traditionally being the peak season for sun care products, the demand surge is anticipated to bolster further growth. The sun care segment's HYRO SKU mix is enhancing the operating margin, achieving an all-time high of 12.4% for Q1 margins.
Revitalized Demand in China
Against expectations, China reported sales of KRW 41.6 billion, marking a 20% growth YoY, and a significant 72% jump in operating profit. The market previously lagged due to pricing negotiations, but the renewed influx of sun care orders suggests sustained momentum moving forward.
US Market Performance
The US division echoed the theme of growth, with an extraordinary 210% increase in sales reaching 21.7 billion won, accompanied by a turnaround in profitability. Strategic customer acquisition, particularly in the base makeup sector, is contributing to consistent profitability, with a reported OPM of 6.9%.
Strategic Valuation and Enhanced Earnings Projections
Kolmar Korea's prospects are buoyed by its suncare momentum and strategic US market positioning. Domestically, record margins are expected in Q2, while US expansion plans are bolstered by the upcoming completion of a second plant in June. This plant will pivot towards onshore production, opening avenues with several brands post-tariff adjustments. Consequently, the company has upwardly revised its US revenue guidance for 2025 from KRW 80 billion to KRW 90 billion.
Given these developments, we are revising Kolmar Korea's price target to KRW 110,000, capitalizing on the improved earnings estimates (25F domestic OPM of 12.5%) and favorable industry valuation multiples. Currently trading at 14x 12FM PER, the stock remains a strong 'Buy'.
International Expansion: China and Colombia's Economic Synergy
Belt and Road Initiative: A New Chapter with Colombia
China's Belt and Road Initiative continues to make headway as China and Colombia sign a cooperation pact, marking a significant pivot in South America's approach to international trade. Colombian foreign minister Laura Sarabia coined this as Colombia's "boldest step in decades," heralding vast opportunities in trade, investment, and tourism sectors.
With Colombia joining the ambitious Belt and Road Initiative, China secures a crucial partner in infrastructure and trade, potentially fueling economic growth in the region. Notably, China has surpassed the United States as Colombia's largest import source, underscoring the evolving trade dynamics.
Commercial Implications
This strategic alliance is expected to open Colombian markets to more Chinese investments and infrastructure projects, with President Xi Jinping reaffirming China's commitment to importing high-quality Colombian goods. Given the strategic significance of Latin America and the Caribbean, this agreement cements China's growing influence and raises the stakes for US trade policy.
As the Belt and Road Initiative continues to expand, these partnerships underscore global shifts towards multilateral trade frameworks, potentially offering investment opportunities in associated infrastructure and trade facilitation projects. Investors should watch for Colombian equities and sectors poised to benefit from this deal, anticipating continued strategic growth.
Conclusion
The success of Kolmar Korea against market predictions and the strategic BRI partnership between China and Colombia highlight the dynamic nature of global economic and business landscapes. As trends continue to evolve, stakeholders should remain vigilant in aligning their portfolios with emerging growth avenues and geopolitical shifts.
