[Click eStock] "Korea Kolmar, Stock Severely Undervalued... Domestic and Overseas Corporations Showing Growth"

Korea Kolmar Saengmyeongwahaga Research Institute

[Asia Economy Reporter Kwon Jae-hee] NH Investment & Securities announced on the 22nd that it maintains a 'Buy' rating and a target price of 60,000 KRW for Hankook Kolmar.

Hankook Kolmar's consolidated sales for the fourth quarter of last year amounted to 402.3 billion KRW, a 15.3% increase compared to the same period last year. Operating profit was 25.9 billion KRW, down 50.2% during the same period. While the operating profit of its subsidiary Innoen sharply decreased compared to the previous year due to the low-margin Merck & Company (MSD) vaccine introduction effect, the profitability of the core separate cosmetics division significantly improved.

Jomi-jin, a researcher at NH Investment & Securities, analyzed, "Although there are some shortcomings in the domestic and overseas client portfolio compared to competitors, these are being compensated by the expansion of new clients," adding, "Despite the poor performance of the largest client, a double-digit operating profit margin was recorded, proving the improvement of basic strength and the potential for profit leverage expansion due to increased orders from new clients in the future."

The end of the decline in the Beijing branch in China and the continued high growth of the Wuxi branch are also positively evaluated. The U.S. branch (PTP) is expected to improve performance this year through more aggressive sales activities and investments by acquiring the remaining shares. The Canadian branch (CSR) is expected to expand sales growth at a higher level than anticipated through capacity expansion.

Researcher Cho said, "Despite the phase where recovery of the domestically weighted branch and growth of overseas branches can be expected simultaneously, the current stock price at a price-to-earnings ratio (PER) of 12.7 times as of 2022 is judged to be excessively undervalued."

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