[Into the Stocks] Korea Kolmar Soars Riding the 'Reopening' Optimism

Up 26.67% Compared to Early This Month
Market Cap Also Increased to 1.0593 Trillion Won

[Asia Economy Reporter Lee Jung-yoon] The stock price of Kolmar Korea continues its sharp upward trend. Despite geopolitical headwinds and last year's performance falling short of expectations, optimism about the reopening is driving the stock price higher.

According to the Korea Exchange on the 28th, Kolmar Korea was trading at 46,550 KRW at around 9:40 a.m., up 0.54%. On the 25th, it closed the session at 46,300 KRW, up 1.76%. Compared to early this month, the stock price has risen 26.67%. It has jumped 36.58% compared to its 52-week low. The market capitalization, which was 781.3 billion KRW on the 27th of last month, increased to 1.0593 trillion KRW on the 25th of this month as the stock price gained momentum.

Looking at last year's performance, the rise is beyond expectations. Kolmar Korea recorded sales of 403.1 billion KRW in Q4 last year, an 18% increase year-on-year, but operating profit was only 25.9 billion KRW, about 50% of the previous year. This fell short of market expectations. The decline in profits and poor performance of its subsidiary HK Innoen were the causes. HK Innoen's operating profit decreased by 60.9% compared to the previous year. With hangover relief products like Condition and Hovenka accounting for 15% of sales and 20% of profits, the impact of social distancing measures was directly reflected in the results.

In the securities industry, it is analyzed that expectations of direct benefits from the reopening are reflected in the stock price. A rebound in HK Innoen's performance is anticipated as daily life recovers. The growth of the Beijing and Wuxi subsidiaries in China also stands out. In particular, the Wuxi subsidiary's sales rose 72% year-on-year to 28.7 billion KRW, and with such high growth, it is expected to achieve break-even point (BEP) in the first half of this year. Inventory adjustments by major cosmetics clients are also expected to conclude, and industry recovery is anticipated.

Researcher Baesong from KTB Investment & Securities explained, "Kolmar Korea's stock price has not attracted much attention due to weakening core business competitiveness and an increased proportion of non-cosmetics subsidiaries, but we believe the core business performance has bottomed out." He added, "HK Innoen is expected to benefit more substantially from the reopening than the cosmetics sector."

However, Han Yoo-jung, a researcher at Daishin Securities, pointed out, "Due to the impact of one-off gains in Q4 last year and the base burden from changes in product mix, the profitability of the separate corporation this year is estimated to decline slightly compared to 2021."

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