[Click eStock] "Cosmax, Uptrend Fueled by Strong Performance in China"

KB Securities "Cosmax Target Price Raised by 17% to 175,000 KRW"
Strong ODM Position Amid Growing Chinese Cosmetics Market

[Asia Economy Reporter Gong Byung-sun] Cosmax is expected to post strong second-quarter results, driven by sales growth in China. In the domestic market, cosmetic sales are also projected to show an upward trend.

On the 12th, KB Securities estimated Cosmax's second-quarter sales this year to increase by 10% year-on-year to 415.2 billion KRW, and operating profit to rise by 21% to 31.6 billion KRW. These figures exceed the market consensus of 404.7 billion KRW in sales and 31.1 billion KRW in operating profit, respectively.

Strong performance is anticipated in the Chinese market. KB Securities forecast second-quarter sales in China to grow 32% year-on-year to 173.8 billion KRW, with operating profit increasing by 38% to 17.7 billion KRW. Sales in the Shanghai and Guangzhou regions are expected to rise by 36% and 21%, respectively, while operating profit margins are projected to remain at a high level of around 10%.

The strong results in the Chinese market are due to Cosmax maintaining its position as the number one original design manufacturer (ODM) in the expanding cosmetics market. Recently, Cosmax's top client lineup has been built with regional brand companies driving market growth. KB Securities analyst Park Shin-ae stated, “Chinese consumers are increasingly favoring domestic color cosmetics brands,” adding, “Popular Chinese regional brands already secured by Cosmax will contribute to growth.”

In the domestic market, the cosmetics segment is expected to stand out. KB Securities predicted that domestic sales of cosmetics, excluding hand sanitizers, will grow by around 13%. However, due to a decline in hand sanitizer sales, operating profit margins are expected to fall by 0.9 percentage points compared to the same period last year. Domestic standalone sales are forecast to increase by 6% year-on-year to 222.2 billion KRW, while operating profit is expected to decrease by 4% to 20 billion KRW.

Accordingly, KB Securities maintained its “Buy” rating on Cosmax. The target stock price was revised upward by 17% to 175,000 KRW from the previous estimate. The closing price on the previous day was 132,000 KRW.

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