BULLINK Portfolio Deep Dive: Unveiling the Market Surprises for Q1 2025
Unpacking Earnings Surprises in Peak Season
1Q25 Performance Overview: Dynamics in Korea, China, and the U.S.
Kolmar Korea:
- Revenue: KRW 653.1 billion (+14% YoY)
- Operating Profit: KRW 59.9 billion (+85% YoY)
Kolmar Korea outperformed market predictions owing to robust growth and operational efficiency across key regions including Korea, China, and the United States.
Domestic Market:
- Sales: KRW 274.3 billion (+11% YoY)
- Key Driver: Sun care indie brands, reflecting a shift towards these brands as they outshine traditional legacy brands, which now constitute a smaller market share (10% vs. previous 40%).
- Outlook: Anticipating continued top-line acceleration into Q2's peak season. The improved product mix bolstered operating margins to a record 12.4%.
China:
- Sales: KRW 41.6 billion (+20% YoY)
- Operating Profit: KRW 3.1 billion (+72% YoY; Operating Profit Margin: 7.5%)
Previously underperforming, China's recovery was unexpected but welcome. Enhanced sun care order volume following and competitive unit price negotiations are significant contributors.
United States:
- Sales: KRW 21.7 billion (+210% YoY)
- Operating Profit: KRW 1.5 billion (notable turnaround, QoQ +300 million won; Operating Profit Margin: 6.9%)
Exceptional performance was driven by strong order volumes from key clients and newly acquired base makeup customers. Profitability has been consistently positive for two consecutive quarters, with promising expansions.
Investment Insight: An Attractive Value Proposition
The momentum in sun care and favorable valuation metrics in the U.S. underscore Kolmar Korea's stock potential. With peak season bolstering a robust order pipeline, Q2 is poised for domestic margin records. In the U.S., Plant 2 is scheduled for completion in June. This strategic move opens doors for new partnerships, particularly after recent tariff policies. Consequently, U.S. revenue projections for 2025 have been elevated from KRW 80 billion to KRW 90 billion.
Market Positioning and Valuation
- Revised Price Target: KRW 110,000 (up from KRW 92,000)
- Rationale: Increased domestic OPM estimates (12.5% for 2025) and elevated industry multiples
- Valuation: Current trading at 14x 12-month forward P/E ratio; remains an appealing buy
This detailed analysis delineates the strategic aspects driving Kolmar Korea's performance, providing investors with an insightful BULLINK portfolio perspective. Stay engaged with upcoming market trends and refined investment strategies that yield high engagement and conversion, as demonstrated by Kolmar Korea's compelling Q1 results.
