BULLINK Portfolio: Earnings Surprises Unveiled – The Peak Season Gains
Key Highlight: Kolmar Korea's Exceptional 1Q25 Performance Across Key Markets
A. Unlocking Growth Potential in Korea and China
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Korea’s Sun Care Surge: Kolmar Korea redefined expectations with its 1Q25 performance, clocking a revenue of KRW 653.1 billion (+14% YoY) and an operating profit of KRW 59.9 billion (+85% YoY). A robust domestic surge, fueled by indie sun care brands, saw domestic sales scaling to KRW 274.3 billion (+11% YoY). The shrinking legacy brands are shrinking from 40% to an estimated 10%, as sun care orders skyrocket ahead of peak season.
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China’s Resurgence: An astounding turnaround in China saw sales rise to KRW 41.6 billion (+20% YoY). Despite stagnant growth last year due to unit price negotiations in sun care, Kolmar expects an expansion in sun care orders, spotlighting the remarkable 72% YoY profitability surge (KRW 3.1 billion, OPM 7.5%).
B. U.S. Market Momentum and Future Prospects
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Exponential Growth: The U.S. market signifies a paradigm shift with sales blossoming to KRW 21.7 billion (YoY +210%), coupled with an operating profit nail-biting rise of 1.5 billion won. The expansion in sales and securing new makeup customers shores up confidence in sustained profitability (6.9% OPM).
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Strategic Expansion: With a second plant ready to operationalize in June, the U.S. market targets a leap in revenue from KRW 80 billion to KRW 90 billion for 2025, demonstrating Kolmar's calculated stride in leveraging tariff policies for onshore production.
C. Valuation and Investment Considerations
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Market Opportunities: Kolmar’s stock is poised for relevance with the sun care boom and strategic U.S. expansion driving bullish sentiment. Peak season dynamics bolster domestic margins, while global discussions anchor its U.S. valuation prospects.
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Enhanced Pricing Target: Reflecting improved operating margins (25F domestic OPM of 12.5%) and positive market positioning, Kolmar Korea’s revised price target ascends from KRW 92,000 to KRW 110,000. Currently trading at 14x 12FM PER, it presents as an attractive buy opportunity.
Conclusion:
Kolmar Korea, with its relentless focus on sun care and strategic penetration into key global markets, demonstrates the potency of adept market positioning for accelerating revenue streams and enhancing shareholder value. As earnings surprises unfold, Kolmar's strategic execution paves the way for sustainable growth and profitable ventures in the peak season.
This BULLINK Portfolio entry reflects Kolmar’s dynamic performance and anticipates a pivotal Q2, capturing the essence of growth-driven strategic enquiries.
