BULLINK Portfolio Format
Earnings Surprises Await for Peak Season
1Q25 Analysis: Korea, China, and US Surprises
Sample Company: Kolmar Korea
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Overview:
Kolmar Korea's first quarter of 2025 results exceeded market expectations with a robust revenue report of KRW 653.1 billion, marking a 14% year-over-year growth. An impressive surge in operating profit to KRW 59.9 billion (+85% YoY) underscores the company's strategic efficiency and market adaptability across its core territories – Korea, China, and the US. -
Domestic Performance:
Korean domestic sales soared to KRW 274.3 billion, reflecting an 11% increase YoY. This was largely fueled by the indie sun care segment, outperforming traditional legacy brands which are seeing a decline. With Q2 being the sun care peak season, Kolmar anticipates further top-line acceleration. Projections show a shift from a 40% to a 10% dominance of legacy brands, paving the way for improved hero SKU contributions and an unprecedented Q1 operating margin boost to 12.4%. -
China's Upswing:
China's performance revealed remarkable recuperation with KRW 41.6 billion in sales, ascending by 20% YoY. Operating profit was notably uplifted by 72%, reaching KRW 3.1 billion. The prior year's supply chain standoff due to pricing negotiations seems resolved, with sun care orders rebounding and expected to sustain their climb. -
US Market Momentum:
The US division reported a swift rise in sales to KRW 21.7 billion, marking an exceptional 210% YoY increase. Operating profitability turned positive with a marked KRW 1.5 billion output. Continued successes with cornerstone customers and inroads with new base makeup products signal an affirmative outlook. This is the second subsequent quarter showcasing significant margin expansion.
Investment Analysis:
Kolmar Korea's stock is notably buoyed by optimism in the sun care sector and valued stateside expansion. Suncare orders robustly fill the order books, aligning with the approaching peak season yields. With expectations set on record domestic margins in Q2 and the inauguration of a second US production facility by June, financial prospects are buoyant. Active negotiations for generating onshore production post tariff-policy adjustments further bolster growth potential. Consequently, our revenue guidance for the US in 2025 adjusts upwards from KRW 80 billion to KRW 90 billion.
Valuation Upgrade:
Our price target adjustment reflects the upbeat domestic outlook (+12.5% OPM) and the scaling industry valuations, rising from KRW 92,000 to KRW 110,000. The stock's current trading multiple at 14x 12 Month Forward Price to Earnings (PER) remains an attractive entry point. The recommendation is to maintain a ‘Buy’ stance given the compelling upside potential.
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