BULLINK™ Portfolio Report: Navigating Earnings Surprises in Peak Season
1Q25 Performance: A Tripartite Upsurge Across Korea, China, and the US
Kolmar Korea: A Case Study in Surpassing Expectations
Kolmar Korea has delivered an extraordinary performance in the first quarter of 2025, exceeding market forecasts by a substantial margin. The company reported a revenue surge to KRW 653.1 billion, marking a 14% year-on-year increase. Even more impressive is the operating profit, which soared by 85% year-on-year to KRW 59.9 billion. This strong growth signifies robust operating leverage, underpinned by dynamic market regions: Korea, China, and the United States.
Domestic Triumphs: A Sun Care Revolution
In Korea, domestic sales reached KRW 274.3 billion, growing 11% year-on-year, largely propelled by the surge in sun care indie brands. These small yet mighty indie entities are outpacing traditional legacy brands, thus reshaping the industry's landscape. As Q2 heralds the sun care peak season, we foresee a bolstered top-line supported by increased orders from key brands. Notably, the demand for a revitalized Sun Care and Hero SKU mix boosted the operating margin to an unprecedented 12.4%, setting a new benchmark for Q1 performance.
Example Insight: Watch for indie brand consolidations and possible M&A activity as market dynamics shift towards agility and novelty.
China's Surprise Resurgence
China, previously a laggard in performance, showcased a resilience turnaround with sales climbing to KRW 41.6 billion, reflecting a 20% year-on-year growth. The operating profit stood at KRW 3.1 billion, boasting a 72% year-on-year hike alongside a 7.5% operating profit margin. The comeback is chiefly attributed to the revitalization of sun care orders, undeterred by last year's pricing challenges.
Example Insight: Investors should consider long-term positions as Chinese market sentiment stabilizes.
The US Market: A Virtuous Growth Cycle
The US market continues to shine with a stellar performance—sales escalated by 210% year-on-year to 21.7 billion won, while operating profits turned positive, showing an incremental growth of 300 million won quarter-on-quarter. This uplift is driven by strong order flows from existing and new product lines, complemented by new customer acquisitions in base makeup.
Example Insight: The US plant expansion will provide strategic leverage with tariff ease, making it a focal point for future earnings growth.
Strategic Fiscal Position: Earnings and Valuation Reflections
Kolmar Korea is currently benefiting from a conducive mix of robust sun care sales momentum and attractive US valuations. The ongoing peak season supports strong order inflows, anticipated to achieve record domestic margins in the upcoming Q2. With the second US plant nearing completion in June, and active customer engagement in reshoring production post-tariff changes, we have adjusted our 2025 US revenue guidance from KRW 80 billion to KRW 90 billion.
We have accordingly lifted our price target from KRW 92,000 to KRW 110,000, reflecting enhanced 25F domestic operating margins of 12.5% and an enriched valuation via industry multiples. At a current trading ratio of 14x 12FM PER, the stock presents an affordable entry point. The recommended action is a firm buy.
Example Insight: Analysts should consider this a strong buy, leveraging sector multiples as catalysts drive imminent growth.
Conclusion: Kolmar Korea stands as a beacon of multi-regional growth and strategic resilience, affirming its status in the investment pantheon.
Note: All financial figures are indicative and subject to verification from official disclosures.
