BullLink Portfolio Format: Earnings Surprises Await for Peak Season
1Q25 Review: Korea, China, and US Surprises
Company Overview:
Kolmar Korea stands out this quarter with a performance that outpaced market estimates, showcasing robust growth and operational efficiency across its primary geographies—Korea, China, and the US.
Financial Highlights:
- Revenue: KRW 653.1 billion, marking a 14% increase year-over-year (YoY).
- Operating Profit: KRW 59.9 billion, representing an 85% surge YoY, indicative of effective cost management and strategic growth initiatives.
Regional Performance Analysis:
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Korea:
- Domestic sales soared to KRW 274.3 billion (+11% YoY).
- Key Growth Driver: Sun care indie brands significantly propelled this growth, outperforming legacy brands, whose share declined to an estimated 10% from 40%.
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China:
- Sales reached KRW 41.6 billion, a 20% rise YoY, while operating profit increased by 72% YoY, achieving a margin of 7.5%.
- The forecast indicates continued expansion of sun care order volumes, rebounding from the previous year's challenges with unit price negotiations.
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US:
- Exceptional sales growth of 210% YoY, totaling 21.7 billion won, alongside a notable operating profit increase (positive YoY, QoQ +300 million won, OPM 6.9%).
- The key to success: Strong orders from pivotal clients and the acquisition of new base makeup clients.
Strategic Insights:
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Growth Prospects:
- Suncare sector demonstrates a robust order book for the peak season, driving expectations for record domestic margins in the coming quarter.
- A second production facility in the US, scheduled for June completion, is set to enhance capacity to meet rising demand, reflecting positively in projected revenue.
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Valuation and Stock Recommendation:
- Revised revenue guidance for the US has been adjusted upward to KRW 90 billion due to anticipated sales from the new plant.
- The price target has been elevated to KRW 110,000 (from KRW 92,000), influenced by improved operational projections and market multiples.
- Currently trading at a reasonable 14x 12-month forward P/E ratio—underlining a strong buy recommendation.
Conclusion:
Kolmar Korea showcases a compelling investment narrative this quarter, driven by dynamic growth in sun care segments and strategic operational improvements across its key markets. Investors are advised to capitalize on the company’s growth momentum and favorable valuation metrics.
Investment Thesis Rating: BUY
Example Highlights:
- Korea’s Sun Care Boom: A 14% YoY revenue lift powered by robust indie brand performances.
- China's Comeback: A significant 20% revenue growth, signaling recovery and potential for future gains in sun care orders.
- US Expansion Strategy: A 210% sales spike YoY, anticipating further growth with the second facility’s launch.
This transformation captures the essence of the original report, tailored for an investment-savvy audience, emphasizing key financial metrics and strategic growth insights.
