[Click eStock] "Pumtek Korea Undervalued Compared to Peers... Stock Price Re-rating Expected"

[Asia Economy Reporter Ji-hwan Park] Shinhan Financial Investment stated on the 9th that Pumptech Korea's stock price is undervalued compared to its peers, and considering the improving industry conditions, a stock price re-rating is expected. Pumptech Korea is a cosmetics container manufacturer that has grown every year since its establishment in 2001.

Ji-yeon Son, a researcher at Shinhan Financial Investment, said, "Synergies are expected from product lines, new businesses, and online expansion amid industry improvement," adding, "Operating profit this year is expected to increase by 30.4% to 35.7 billion KRW compared to the previous year."

As of last year, the domestic market share was 24%. Based on last year's sales, the product type proportions are 41% pumps and containers, 31% pump tubes, 18% compacts, 7% spoids, and 3% sticks. The company has subsidiaries Bukook TNC (tube manufacturing) and Jallon Natural (distribution of health supplements, functional cosmetics, and daily necessities). Major customers are domestic and international cosmetics manufacturers.

It is analyzed that synergies from ‘product lines,’ ‘new businesses,’ and ‘online’ expansion are expected amid industry improvement. The company holds a stable portfolio covering container products across daily life from cosmetics. During the COVID-19 situation, demand for daily necessities increased, and last year Bukook TNC's operating profit rose by 74% compared to the previous year. Increased sales of hair care and hygiene products offset the sluggish cosmetics industry, contributing to consolidated sales growth.

Improvement in cosmetics consumer sentiment confirmed the industry's recovery trend. Expansion of demand for cosmetics containers, the core business, is anticipated. Especially, supported by a rebound in duty-free cosmetics sales in the second half, supply to domestic and international luxury brands may expand. The proportion of luxury brand supply increased from around 3% in 2018 to the 10% range in the first quarter of 2021.

Sales growth is expected, supported by the recovery of existing export volumes. Researcher Ji-yeon Son explained, "We are continuously investing in securing an eco-friendly business portfolio," adding, "We have developed eco-friendly products using paper and recycled plastics and started supplying eco-tube (paper tube) products." The online business is also being strengthened, with the launch of the non-face-to-face container platform e-PUMTECH in April this year. It is expected to be utilized for discovering new customers as an online cosmetics container custom order and purchase channel.

Operating profit this year is projected to increase by 30.4% to 35.7 billion KRW. Sales and operating profit are expected to grow by 19.7% and 30.4%, respectively, reaching 235.6 billion KRW and 35.7 billion KRW. With the normalization of the cosmetics industry this year and the reflection of sales from the acquisition of Jallon Natural's shares, external growth is expected to continue. Researcher Son stated, "The expected price-to-earnings ratio (PER) based on this year's forecast is 11.5 times, which is undervalued compared to peers," and added, "A stock price re-rating is expected as a benefit from the rebound in the upstream market conditions."

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