BULLINK Portfolio Report: Earnings Surprises Await for Peak Season
1Q25 Review: Korea, China, and US Surprises
Executive Summary: Kolmar Korea’s Strong Performance
Kolmar Korea has outperformed market expectations, delivering remarkable financial results in the first quarter of 2025. With revenues reaching KRW 653.1 billion—a 14% increase year-on-year—and operating profits surging by 85% to KRW 59.9 billion, the company has demonstrated robust growth across its core business regions: Korea, China, and the United States.
Key Highlights:
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Domestic Market Dynamics:
- Achieved domestic sales of KRW 274.3 billion, representing an 11% increase year-on-year. This growth was largely driven by a surge in demand for sun care indie brands, outperforming legacy brands. Sun care products are expected to further boost top-line growth as we approach peak season in Q2. The transition in product mix has pushed operating margins to a record Q1 level of 12.4%.
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Revival in China:
- Unexpected yet strong performance in China, with sales growing by 20% year-on-year to KRW 41.6 billion and operating profit climbing by 72% to KRW 3.1 billion. The revival is attributed to expanded sun care orders, which had previously been hampered by pricing negotiations.
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US Market Growth:
- The US market is exhibiting exceptional growth, with sales skyrocketing by 210% year-on-year to 21.7 billion won, accompanied by a positive operating profit increase of 1.5 billion won. This growth is being fueled by strong customer orders and the addition of new base makeup product lines. Profitability has been sustained for a second consecutive quarter with an operating margin of 6.9%.
Future Prospects and Valuation:
The momentum in sun care and the strategic valuation enhancements in the U.S. are key drivers for Kolmar Korea's stock performance. With a robust order book for the peak sun care season and record domestic margins anticipated in Q2, the outlook remains promising. Furthermore, the completion of a second plant in the U.S. by June is expected to bolster revenue, prompting an upward revision in U.S. revenue guidance from KRW 80 billion to KRW 90 billion for 2025.
Given these optimistic forecasts, we have increased our price target to KRW 110,000 from the previous KRW 92,000. This adjustment reflects elevated estimates with a 12.5% domestic operating margin forecast and an attractive valuation based on industry multiples. Trading at 14x 12FM Price-to-Earnings Ratio, the stock remains a strong buy.
This BULLINK Portfolio Report intends to deliver concise and actionable insights for investors, focusing on the latest earnings surprises and future growth catalysts within Kolmar Korea's strategic markets.
