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1Q25 Review: Global Upsurge in Cosmetics – Korea, China, and US Synchronicity
Kolmar Korea: A Performance Beyond Expectations
In a remarkable fiscal first quarter of 2025, Kolmar Korea has unveiled results that have significantly outstripped market predictions. The company reported a revenue increase to KRW 653.1 billion, marking a 14% year-on-year escalation, with operating profits soaring by an impressive 85% to KRW 59.9 billion. This robust performance is evident across its key markets—Korea, China, and the US—highlighting a strategic expansion and operating leverage.
Domestic Triumph: The Indie Surge
Kolmar's domestic market recorded a commendable sales figure of KRW 274.3 billion, a rise of 11% year-on-year. This boost is largely attributed to the burgeoning craze for sun care among indie brands, which are significantly outshining traditional legacy brands currently in decline. As we approach the peak season of Q2 for sun care products, the firm is registering substantial upticks in order volumes for key brands. The anticipation is for a continued strengthening in top-line growth as legacy brands fade, now accounting for just 10% of sales versus the previous 40%. Enhanced product mixes, particularly in sun care, have propelled the operating margin to an unprecedented 12.4% for Q1.
China: A Surprisal Rebound
After periods of underperformance, Kolmar's Chinese segment delivered unexpectedly robust results, with sales leaping to KRW 41.6 billion, a 20% increase year-on-year. Operating profit saw an even more impressive rise of 72% to KRW 3.1 billion, resulting in a 7.5% operating profit margin. This recovery is fueled by a resurgence in sun care orders, previously dampened by pricing negotiations, and now expected to surge.
US Market: Sustained Growth Momentum
The narrative remains equally optimistic in the US market, which is witnessing an extraordinary sales growth at 210%, reaching KRW 21.7 billion. Operating profit also moved into positive territory, suggesting a sustainable profit trajectory, with an improvement of KRW 300 million quarter-on-quarter. Major customers driving this growth include both established and newly acquired makeup brands, signaling continuous profitability progression.
Strategic Earnings and Valuation Insights
As the momentum in sun care products drives Kolmar Korea's stock, coupled with an advantageous position in the US market, investor sentiment remains high. The ongoing construction of the second plant in the US, set to complete by June, is drawing interest from a roster of brands eager for onshore production—an alignment with shifting tariff policies. Consequently, revenue forecasts for the US segment in 2025 have been adjusted upwards from KRW 80 billion to KRW 90 billion.
The price target has been revised to KRW 110,000, up from KRW 92,000, reflecting enhanced operational margins and increased industry valuations. Despite the upward trajectory, the stock valuation at 14x 12-month forward price-to-earnings ratio remains enticingly accessible. The recommendation to buy remains steadfast.
Deciphering these numbers underscores the strategic market positioning and the unparalleled resilience of Kolmar Korea as a burgeoning force in the global cosmetics sector.
