BULLINK Portfolio Report: 1Q25 Market Disruptors – Kolmar Korea’s Strategic Growth and Market Dynamics

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BULLINK Portfolio Report: Anticipated Earnings Surprises this Peak Season

Portfolio Analysis: 1Q25 Market Disruptors – Korea, China, and the US

1. Kolmar Korea: A Renaissance in Revenue

   Market Performance Overview:

   • Revenue Surge: Kolmar Korea’s 1Q25 results surpassed the market benchmarks, clocking in at KRW 653.1 billion (+14% YoY) with a robust operating profit of KRW 59.9 billion (+85% YoY).
   • Key Drivers: Exceptional growth and operating leverage primarily in Korea, China, and the US markets.

2. Sectoral Growth Insights:

   Korea:

   • Domestic Upsurge: Total sales reached KRW 274.3 billion (+11% YoY) propelled by burgeoning demand from sun care indie brands.
   • Micro-level Impact: As legacy brands retract (an estimated reduction to 10% share from 40%), indie brands continue to capture market ground. Anticipation of peak sun care orders suggests further enhancements in top-line growth.

   China:

   • Unexpected Turnaround: China registered a sales increment of KRW 41.6 billion (+20% YoY), with operating profits surging to KRW 3.1 billion (+72% YoY, OPM 7.5%).
   • Operational Revival: Renewed sun care orders reflect a recovery from last year’s stall due to unit price negotiations, offering signs of continued optimism.

   The United States:

   • Exponential Growth Continues: Sales soared by 210% YoY to 21.7 billion won, with a threefold QoQ uptick in operating profit (+300 million won).
   • Strategic Gaps Filled: New products and partnerships with base makeup clients catalyze profitability, promising sustained improvement in margins.

3. Valuation and Strategic Recommendations:

   • Momentum Catalysts: Sun care sales dynamics and favorable US valuations create dual momentum.
   • Guidance Adjustment: Raised US revenue forecast from KRW 80 billion to KRW 90 billion for FY25, driven by burgeoning orders and Plant 2 dynamics.
   • Investment Outlook: Price target revision to KRW 110,000 from KRW 92,000 reflects the optimistic 12.5% OPM forecast and industry valuation multiples. Current stock trades at an attractive 14x 12FM PER.

Investment Position: BUY

The sustained demand for sun care products, alongside manufacturing and partnership expansions in the US, positions Kolmar Korea as a formidable player in the market. Engage with these assets as they offer compelling growth and value dynamics.

This format provides a structured investment analysis, combining market performance with strategic insights and forecasts for investors.