[Click e Stock] "Korea Kolmar Target Price 55,000 Won... 8% Downward Adjustment"

[Asia Economy Reporter Park Soyeon] On the 16th, KB Securities lowered the target price of Hankook Kolmar to 55,000 KRW, down 8%. The investment opinion was maintained as Buy.

Hankook Kolmar's sales growth rate in China this year is expected to be steady at around 99%. However, the stock price has fallen 16% compared to the beginning of the year. This is because the pace of deficit reduction in China is slower than expected despite sales growth, and the recovery of domestic ODM sales is also below expectations. Additionally, HK Innoen's operating profit is estimated to decrease by 31% this year.

Hankook Kolmar recorded consolidated sales of 376 billion KRW and operating profit of 12.8 billion KRW in the third quarter of this year. Sales met market consensus, but operating profit fell significantly short. This was due to a one-time expense of 7.5 billion KRW incurred as stock issuance surplus related to HK Innoen's listing was deducted as a cost during consolidation adjustments.

Domestic sales grew by 3%, but operating profit decreased by 12%. In China, sales amounted to 31.5 billion KRW with an operating loss of 4.8 billion KRW, resulting in profitability below expectations. North American sales grew by only 9% despite a low base, and operating losses slightly expanded. HK Innoen's sales grew by 25%, with prescription drug sales growing rapidly by 37%, but H&B sales plummeted by 46%. Operating profit margin (OPM) worsened by 3.4 percentage points, leading to a 9% decrease in operating profit. KB Securities analyst Park Sinhae forecasted, "For a stock price rebound, steady growth in core business sales next year and especially improvement in the profitability of the Chinese subsidiary will be necessary."

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