BULLINK Portfolio: 1Q25 Review – Kolmar Korea's Earnings Surprises
Earnings Surprises Await for Peak Season
Executive Summary
Kolmar Korea has delivered a remarkable performance in 1Q25, exceeding market expectations across key sectors. With substantial growth in Korea, China, and the US, the company has set a strong precedent for the upcoming peak season. The following analysis delves into the detailed drivers behind this success and future projections.
Key Highlights
Strong Domestic Performance
- Revenue: KRW 653.1 billion (+14% YoY)
- Operating Profit: KRW 59.9 billion (+85% YoY)
- Growth driven by robust demand in sun care indie brands.
- Expect continued strength in Q2 with record domestic margins as demand outpaces legacy brands (expected to decline from 40% to 10%).
China: A Surprising Turnaround
- Sales: KRW 41.6 billion (+20% YoY)
- Operating Profit: KRW 3.1 billion (+72% YoY, OPM 7.5%)
- Recovery attributed to resolving unit price negotiations leading to increased sun care orders.
USA: Exceptional Growth and Expansion
- Sales: KRW 21.7 billion (YoY +210%)
- Operating Profit: KRW 1.5 billion (YoY positive, QoQ +300 million won, OPM 6.9%)
- Expansion aided by new products and customer acquisition.
- Completion of the second plant in June expected to boost U.S. revenue to KRW 90 billion for the year, up from KRW 80 billion.
Strategic Insights
- The momentum within the sun care sector is a critical driver of Kolmar Korea's current stock momentum and future valuation, particularly with expected peak-season demand.
- The U.S. expansion strategy, coupled with significant increases in operating margins, showcases effective capital utilization and market penetration.
- Active discussions with new brands post-tariff policy indicate further growth potential and strategic positioning in the onshore production landscape.
Revised Financial Outlook
- New Price Target: KRW 110,000 (up from KRW 92,000)
- Reflecting enhanced estimates and valuation multiples.
- The stock is trading at 14x 12FM PER, presenting an affordable buying opportunity given anticipated earnings trajectory.
Conclusion
Kolmar Korea's first-quarter performance highlights significant operational leverage and strategic market positioning. With increased earnings guidance and positive market reception, the company is poised for sustained growth moving into its peak seasons. The ongoing improvements in China and the U.S. market strategies provide a robust foundation for future earnings and valuation growth.
Call to Action
For investors seeking exposure to the cosmetics and personal care sector, particularly with a focus on sun care, Kolmar Korea presents an attractive buy. Market observers should monitor the completion and operational start of the U.S. second plant as pivotal to realizing full-year forecasts.
This report is a synthesis of accessible financial data and market projections. Always perform due diligence before making investment decisions.
