BULLINK Portfolio: Earnings Surprises Await for Peak Season
1Q25 Review: Korea, China, and US Surprises
Overview:
Kolmar Korea has delivered a formidable performance in 1Q25, surpassing market expectations. The company's revenue was recorded at KRW 653.1 billion, marking a 14% year-on-year (YoY) increase. The operating profit surged by 85% YoY, reaching KRW 59.9 billion. This accomplishment is attributed to robust growth and enhanced operating leverage in key markets—Korea, China, and the US.
Regional Performance Insights:
Korea:
- Domestic Sales: KRW 274.3 billion (+11% YoY)
- Growth Drivers: Strong performance of sun care indie brands
- Future Outlook: The peak season for sun care products in Q2 hints at further order expansion. A shift is evident as indie brands now significantly outperform legacy brands, expected to shrink from 40% to 10% of the sales mix.
China:
- Sales: KRW 41.6 billion (+20% YoY)
- Operating Profit: KRW 3.1 billion (+72% YoY, OPM 7.5%)
- Trend: Recovery in sun care orders, bouncing back from last year’s negotiation setbacks.
US:
- Sales: KRW 21.7 billion (YoY +210%)
- Operating Profit: KRW 1.5 billion (YoY positive, QoQ +300 million, OPM 6.9%)
- Strategic Wins: Secured new base makeup customers and maintained strong orders for new products. The continuous improvement of profitability signifies sustained performance for multiple quarters.
Investment Insights:
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Rationale for Buy Rating:
The bullish outlook in sun care momentum and strategic US expansions reinforce Kolmar Korea's investment appeal. The upcoming completion of the second US plant in June further extends growth avenues, especially with new onshore production discussions post-tariff adjustments. -
Guidance Upgrade:
Reflecting the vibrant order scenario and favorable sales trajectories, Kolmar Korea’s 2025 US revenue projection is increased from KRW 80 billion to KRW 90 billion. This adjustment accompanies a hike in the stock price target from KRW 92,000 to KRW 110,000, aligning with enhanced operational metrics and industry valuations. -
Valuation:
Trading at 14x 12FM PER, the stock remains attractively priced amidst market dynamics. The strategic initiatives and forecasted margin expansions substantiate the continued "Buy" signal.
Disclaimer: This report is for informational purposes only. Readers are advised to consider their investment objectives and financial circumstances when investing.
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