BULLINK Portfolio Report: Earnings Surprises Await for Peak Season
1Q25 Review: Korea, China, and US Surprises
In an impressive performance exceeding market expectations, Kolmar Korea reported robust first-quarter results for 1Q25. With revenues soaring to KRW 653.1 billion, a 14% year-over-year increase, and an operating profit climbing by a remarkable 85% YoY to KRW 59.9 billion, the company showcased significant growth and enhanced operational efficiency across its key markets—Korea, China, and the US.
Domestic Market Performance
Kolmar Korea's domestic sales surged to KRW 274.3 billion, marking an 11% YoY increase. This growth was fueled by the robust performance of sun care indie brands, which are outpacing the declining legacy brands. As the industry enters its peak season in Q2, more orders for leading sun care brands are anticipated, potentially driving further top-line growth. The company forecasts a shift in its brand mix, reducing legacy brands from 40% to 10%, thereby boosting operational margins to a record 12.4% for Q1.
China’s Unexpected Growth
After struggling in previous periods, China delivered a surprising turnaround with sales climbing by 20% YoY to KRW 41.6 billion, accompanied by an operating profit increase of 72% YoY to KRW 3.1 billion, translating to an operating margin of 7.5%. This recovery is largely attributed to a resurgence in sun care product orders as pricing tensions with major buyers abate. The momentum is projected to sustain, fostering further growth.
Strong US Momentum
The US segment demonstrated outstanding performance, registering a 210% YoY increase in sales to reach KRW 21.7 billion and a positive swing in operating profit at KRW 1.5 billion. The quarterly operating margin improved by KRW 300 million QoQ to 6.9%, supported by robust order inflows from key customers and the acquisition of new base makeup clients. Profitability is on a sound trajectory, maintaining meaningful margins for the second consecutive quarter.
Attractive Earnings Potential and Valuations
Kolmar Korea's stock is buoyed by favorable sun care market dynamics and US valuation enhancements. The sun care segment benefits from a robust order pipeline amid peak seasonality, while the anticipated completion of a second US plant in June opens avenues for expanded domestic production to capitalize on post-tariff policy changes. As a result, the 2025 US revenue projection has been revised upward from KRW 80 billion to KRW 90 billion, backed by strong Plant 1 orders and Plant 2 sales trends.
Accordingly, we elevate our price target to KRW 110,000 from KRW 92,000, reflecting the improvement in estimates (domestic OPM forecasted at 12.5% for 2025) and more favorable industry valuations. Currently trading at 14x 12FM PER, the stock remains a compelling buy.
End of BULLINK Portfolio Report
Note: This report provides a detailed analysis based on market data and company performance. Always consider market risks and conduct thorough research or consult with a financial advisor when making investment decisions.
