[Click eStock] "Pumtek Korea, Time to Focus on Customer and Product Diversification"

Hanyang Securities Report

[Asia Economy Reporter Minji Lee] Hanyang Securities maintained a buy rating and a target price of 32,000 KRW for Permtek Korea on the 27th.

In the second quarter, sales reached 56.1 billion KRW and operating profit was 7.4 billion KRW, increasing by 13.2% and 8.1% respectively compared to the same period last year. By segment, Permtek Korea recorded separate sales of 40.6 billion KRW and operating profit of 5.6 billion KRW, up 15.9% and 10% year-on-year. Bukook TNC, which has a high proportion of household goods containers, posted sales of 13.2 billion KRW and operating profit of 1.3 billion KRW, down 16% and 16% respectively from the same period last year. The operating profit margin was 13.1%, down 0.6 percentage points from a year earlier, due to a temporary decline in profit margin caused by reduced production efficiency from process advancement carried out in the second quarter.

Yongho Kim, a researcher at Hanyang Securities, said, "Despite the sluggishness in household goods containers in the second quarter, the clear sales recovery of cosmetic containers drove external growth," adding, "Bukook TNC, which has a high proportion of household goods containers, recorded negative growth due to a high base last year."

In the second half of the year, sales expansion is expected for small and medium-sized brands and overseas brands. Typically, overseas brand sales surge during the peak season in the second half, such as during the Singles' Day and Black Friday events. The company is expected to respond positively to the increasing demand from small and medium-sized brands amid the rise of indie brands, as it possesses a variety of product categories and designs.

Researcher Kim said, "The diversified customer and product portfolio simultaneously provide growth potential and stability," adding, "This is a noteworthy point during times of increased uncertainty such as the COVID-19 Delta variant." The sales proportions of domestic large brands, small and medium-sized brands, and overseas brands are 19%, 56%, and 25%, respectively, with household goods containers accounting for 11% of total sales.

Researcher Kim stated, "Profitability is in a stabilization phase, and profit growth is expected with steady sales growth in the future," adding, "Since recording 16.2% in 2018, it has entered a stabilization phase, and this year's operating profit margin is projected at 13.7%," and "Gradual profitability improvement is expected due to fixed cost effects from scale expansion and product mix improvement."

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