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Earnings Surprises Await for Peak Season: BULLINK Portfolio Insights
Sector Focus: Consumer Discretionary | Region: Global (Korea, China, USA)
1Q25 Review: Korea, China, and US Surprises
Kolmar Korea's Market Triumphs and Strategic Positioning
Kolmar Korea has hit a high note in 1Q25, outpacing market predictions with astounding financial performance. Revenues soared to KRW 653.1 billion, a 14% year-over-year increase, accompanied by an impressive operating profit surge of 85% YoY to reach KRW 59.9 billion. This growth trajectory is anchored in robust market influence across Korea, China, and the United States.
Key Performance Metrics:
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Domestic Growth: With revenues touching KRW 274.3 billion (+11% YoY), the Korean domestic market benefited from an upswing in indie sun care brands, which are outperforming legacy brands. This trend is pivotal as peak sun care season in Q2 promises further order influx, potentially amplifying market share as legacy brands retract to an estimated 10% dominance.
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China’s Rebound: Despite last year's setbacks, Kolmar Korea has revitalized its Chinese market presence, achieving 20% YoY sales growth to KRW 41.6 billion and a striking 72% YoY rise in operating profit, with an operating margin of 7.5%. This recovery is backed by resumed sun care orders, overcoming previous pricing negotiations.
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US Expansion: In the US, Kolmar Korea stakes a claim to high-growth and profit enhancement with sales surging by 210% YoY to 21.7 billion won, and operating profits turning positive. The addition of new base makeup clients has solidified its market standing, ensuring profitability for the second quarter in succession.
Strategic Evaluation: Earnings and Growth Potential
Kolmar Korea’s strategic advantage lies in its dual momentum—dynamic sun care seasonality and the operational expansion in the US. The impending launch of its second US plant in June signals capacity augmentation, expected to elevate US revenue projections from KRW80 billion to KRW90 billion for FY25. This outlook is underpinned by active negotiations for onshore production post-tariff onset, enhancing cross-border operational synergy.
Investment Insight
Given the upward earnings revision and favorable valuation backdrop, we adjust Kolmar Korea's price target to KRW110,000, up from KRW92,000. With a current trading multiple of 14x 12FM PER, the stock presents a compelling buy opportunity. The anticipated domestic OPM enhancement to 12.5% for FY25 alongside industry multiple expansions fortifies its investment case.
Conclusion:
Kolmar Korea exemplifies a resilient growth narrative underpinned by strategic market maneuvers and operational excellence across key geographies. As sun care orders peak and US production scales, investors are positioned to capture value creation momentum reflective of Kolmar Korea’s innovative market propositions.
Keep this in the BULLINK portfolio for strategic tracking and periodic updates.
