BULLINK Portfolio Report
Earnings Surprises Await for Peak Season
1Q25 Review: Korea, China, and US Surprises
Kolmar Korea emerged as a standout in 1Q25, surpassing market expectations with robust financial outcomes. The company's revenue hit KRW 653.1 billion, marking a 14% YoY increase, alongside a remarkable 85% YoY rise in operating profit, reaching KRW 59.9 billion. These impressive figures underscore the strategic operating leverage achieved across key regions: Korea, China, and the US.
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Domestic Market Performance
- Sales: KRW 274.3 billion (+11% YoY)
- Growth Driver: Accelerated sales from sun care indie brands even as legacy brands retreat (estimation: legacy brands to shrink from 40% to 10%).
- Seasonal Influence: Anticipation of substantial top-line growth in Q2, attributed to peak season dynamics.
- Operating Margin: A record high at 12.4%, buoyed by the strategic Sun Care and Hero SKU mix.
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China's Unexpected Resurgence
- Sales: KRW 41.6 billion (+20% YoY)
- Operating Profit: KRW 3.1 billion (+72% YoY, OPM 7.5%)
- Market Insight: Rebounding sun care orders as pricing negotiations stabilize, bolstering sustained growth projections.
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Strengthened US Market Position
- Sales Surge: Reached 21.7 billion won, a striking YoY increase of 210%
- Profit Reversal: Operating profit at 1.5 billion won improved QoQ by 300 million won, achieving an OPM of 6.9%
- Strategic Moves: Secured key customer orders, expanded into new base makeup client markets; marked quarter-on-quarter profitability growth.
Strategic Outlook and Valuation Prospects
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Sun Care and US-Driven Momentum
- Sun care sector benefits from peak season activity; anticipated record domestic margins in Q2.
- Expansion with the second US plant slated for completion in June; promising dialogues for onshore production post tariff policy adjustments.
- Revised US Revenue Forecast: Increased from KRW 80 billion to KRW 90 billion for FY25.
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Investment Perspective
- Revised Stock Price Target: Upgraded to KRW 110,000 from KRW 92,000 due to amplified estimates (domestic OPM forecast for FY25 at 12.5%) and favorable industry multiples.
- Current Valuation: Trading at a 14x 12FM PER, signaling a favorable entry point.
This BULLINK-style insight harnesses the dynamic interplay between Kolmar Korea’s strategic execution and emerging market opportunities, reinforcing a positive investment stance. Continued monitoring of market responses and strategic initiatives remains essential as the fiscal year progresses. Buy recommendation is maintained.
Portfolio Management Note: Integrating these findings into your investment choices will leverage the temporary momentum, offering a calculative edge in navigating volatilities and reward potentials.
