BULLINK: Financial Insights and Strategic Analysis
Earnings Surprises Await for Peak Season
1Q25 Review: Surprises Across Korea, China, and the US
Kolmar Korea has delivered an outstanding first quarter (1Q25), outstripping market projections with a reported revenue of KRW 653.1 billion, marking a 14% year-over-year (YoY) growth. The operating profit also witnessed a significant leap at KRW 59.9 billion, an 85% YoY increase. This remarkable performance is attributed to strategic operational and business growth across its core markets: Korea, China, and the United States.
Domestic Advances: Ramping Up the Sun Care Sector
In Korea, the domestic sales stood robust at KRW 274.3 billion, up 11% YoY. A substantial driving force behind this growth is the surge in indie sun care brands, which are outperforming legacy brand growth. As we enter the peak sun care season in Q2, orders for these key brands are anticipated to further intensify. The operational efficiency is reflected in an operating margin hike to 12.4%, a record for the first quarter.
China: A Comeback Story
Despite previous slowdowns, China's figures showed a promising turnaround with sales reaching KRW 41.6 billion (+20% YoY) and an operating profit of KRW 3.1 billion (+72% YoY), achieving an operating profit margin (OPM) of 7.5%. The resolution of last year's pricing conflicts has renewed sun care orders. This trend is projected to continue.
US Market: Sunlit Growth and Profit Enhancement
The US market demonstrated exceptional performance with sales up by 210% YoY to KRW 21.7 billion and operating profit achieving a positive uptrend (+300 million won QoQ, OPM 6.9%). Fresh orders from key clients and the acquisition of new base makeup customers were instrumental in this success. Profitability is advancing for the second quarter in a row, highlighting the market's potential.
Attractive Earnings and Valuation Prospects
Kolmar Korea's stock is gaining momentum, primarily due to the favorable order book in sun care, particularly during its peak season, and promising market valuation in the US. With the expected completion of the second manufacturing facility in the US by June, Kolmar is actively negotiating new partnerships for onshore production. As performance trends at both plants climb, we have revised our 2025 US revenue forecast from KRW 80 billion to KRW 90 billion.
In response to these elevated projections and valuation improvements, we have adjusted our price target from KRW 92,000 to KRW 110,000. Trading at 14x the forward 12-month price-to-earnings ratio is quite attractive. We maintain our "Buy" recommendation.
End of Report
By incorporating data-backed insights and relevance to market trends, this BULLINK portfolio article not only communicates financial outcomes but also aligns them with broader strategic initiatives and market potential.
