[Bio That Shook the Market] Leaders Cosmetics Soared with Hwang Woo-seok Theme and Mask Packs... "Ah, Those Were the Days"

[Asia Economy Reporter Yoo Hyun-seok] Leaders Cosmetics, which once gained fame as a theme stock related to Hwang Woo-suk and as a leading mask pack stock, is now facing an emergency due to consecutive losses. With three consecutive years of losses up to last year, the company is at risk of being designated as a management item, and plans to overcome the crisis by strengthening marketing in China and other measures.

Leaders Cosmetics was established in December 1986 under the name Sanseong. After changing its name to Sanseong P&C in 2002, it entered the KOSDAQ market in 2003. Later, in 2011, it merged with Leaders Cosmetics and changed its name to Sanseong LNS, and since 2016, it has been operating under its current name. Along with the name changes, the business focus shifted from corrugated cardboard manufacturing to cosmetics such as mask packs.

The company first made a name for itself in 2004. It was considered a theme stock related to stem cells and Hwang Woo-suk. This was because it held shares in Future Cell Bank, a stem cell bank, and Pharmicell, a stem cell therapy developer. As a result, between April 2004 and April 2005, Leaders Cosmetics' stock price surged about 20 times within a year. After a quiet period, Leaders Cosmetics made its mark on the stock market once again?this time due to mask packs.

After the 2011 merger, the mask packs released by Leaders Cosmetics sold like hotcakes in China and other markets. On a consolidated financial statement basis, sales increased from 45.1 billion KRW in 2011 to 120 billion KRW in 2014. Sales continued to grow explosively, reaching 172.8 billion KRW and 181.3 billion KRW in 2015 and 2016, respectively. At that time, it was unusual for a KOSDAQ stock to have reports issued by foreign securities firms.

However, the rapid growth did not last long. Sales plummeted in 2017 due to the THAAD (Terminal High Altitude Area Defense) incident. Consequently, sales dropped sharply to 139.9 billion KRW and 139.1 billion KRW in 2017 and 2018, respectively, and further declined to 95.6 billion KRW and 93.7 billion KRW in 2019 and 2020. As performance declined sharply, factory operating rates also suffered. Although production volumes vary by year, from 2018 to last year, the average factory operating rate remained at about 24.3% compared to an average production capacity of approximately 423.32 million units.

A company official stated, "After the THAAD incident, there were lawsuits with vendors, and during this process, vendor replacements occurred, which caused insufficient sales. Since a large portion of sales comes from China, sales appeared to decline in the first and second quarters of last year due to COVID-19 and other factors."

As performance shrinks, the possibility of being included in the management item list has increased. Based on individual financial statements, last year's sales recorded 32.4 billion KRW, a decrease of 18.02% compared to the previous year. Operating losses decreased from 26.4 billion KRW to 10.4 billion KRW. The company has been in the red since 2018. For KOSDAQ-listed companies, recording losses for four consecutive years results in inclusion in the management item list.

This year’s performance has become even more critical for Leaders Cosmetics. At the regular shareholders' meeting on the 29th of last month, the company changed its business purpose from medical equipment leasing to manufacturing and sales of medical equipment, medical supplies, and medical devices. Through this, the company plans to enter the hospital-exclusive cosmetics business and strengthen marketing using Chinese Wanghong (famous creators) to improve performance.

A company official emphasized, "In the third and fourth quarters of last year, we strengthened sales in China through Wanghong. This year, we will also boost sales by enhancing domestic marketing activities centered on Wanghong broadcasts and newly launched products." He added, "We are preparing exclusive cosmetics that require dermatological prescriptions, and we expect to launch the products in the third or fourth quarter. Visible sales are expected to occur around next year."

This content was produced with the assistance of AI translation services.