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BULLINK Portfolio Report: Earnings Surprises and Growth Prospects in Key Markets
1Q25 Review: The Unexpected Success Story from Korea, China, and the US
Insights from the first quarter of 2025 reveal surprising performances for Kolmar Korea, with impressive revenue of KRW 653.1 billion, marking a 14% increase year-on-year (YoY), and an operating profit soaring 85% YoY to KRW 59.9 billion. Key drivers of this growth include strong operational leverage and strategic positioning across vital regions such as Korea, China, and the US.
Korean Market: A Closer Look at Domestic Expansion
Domestically, Kolmar Korea's sales reached KRW 274.3 billion, an 11% rise from the previous year. This growth was propelled by indie sun care brands, which delivered superior performance compared to legacy brands—predicted to decline from a 40% market share to 10%. The peak Q2 sun care season is intensifying this trend, leading to escalated orders and an exemplary operating margin of 12.4% for the quarter.
China: Recovery and Expansion
China's performance was notable, with sales increasing by 20% YoY to KRW 41.6 billion and operating profits surging 72% to KRW 3.1 billion, achieving an operating margin of 7.5%. Following a previous year's dip due to pricing negotiations, this year signals a revival in sun care demand, suggesting continued growth.
US Market: Surge in Sales and Profitability
The US sector demonstrated remarkable growth, with sales of KRW 21.7 billion, showing a staggering 210% increase YoY, and a positive operating profit of KRW 1.5 billion. This growth reflects robust order volumes and successful customer acquisition, bolstering profitability for a second consecutive quarter.
Investment Insight: Evaluating Earnings and Valuation
Kolmar Korea's stock is gaining momentum from thriving sun care orders and favorable valuations in the US. With the sun care market expanding and the forthcoming launch of their second US plant by June, the company is well-placed to capitalize on these opportunities. Consequently, the 2025 US revenue forecast has been adjusted upward from KRW 80 billion to KRW 90 billion.
In response to these promising indicators, we've revised the company's stock price target to KRW 110,000, up from KRW 92,000, accounting for increased earnings estimates and improved industry multiples. Trading at a 14x 12FM price-to-earnings ratio, the company represents a sound investment. Our recommendation remains a strong BUY, based on these heightened forecasts.
This BULLINK portfolio report encapsulates key financial results and strategic insights, highlighting potential opportunities and risks for investors keen on capitalizing on Kolmar Korea's burgeoning markets.
