[Click eStock] "Korea Kolmar, Favorable Earnings Outlook Despite Unfavorable Domestic and External Conditions"

[Asia Economy Reporter Lee Jung-yoon] Ebest Investment & Securities maintained a buy rating and a target price of 58,000 KRW on Korea Kolmar on the 21st, noting that despite rising logistics costs and raw material prices in the second quarter of this year and unfavorable macro conditions in the Chinese market, the domestic recovery and the solid performance of its subsidiary HK Innoen are noteworthy.

Korea Kolmar's consolidated sales for the second quarter are expected to be 449.5 billion KRW, an 8.9% increase year-on-year, and operating profit is estimated at 31 billion KRW, a 45.7% increase, in line with consensus estimates.

Researcher Orin Ah of Ebest Investment & Securities said, "Although overseas subsidiaries are expected to perform somewhat sluggishly due to unfavorable domestic and international environments, the recovering domestic business and strong performance of HK Innoen are expected to provide solid defense. The domestic standalone segment is estimated to grow sales by 12.7% year-on-year due to the recovery of major clients following the lifting of social distancing measures, and profitability management is actively continuing, so an operating profit margin in the low double digits around 10% is anticipated," she explained.

HK Innoen is expected to see sales growth through the new product K-Cab oral disintegrating tablets, and milestone revenue from China is also expected to be recognized in the second quarter, with operating profit estimated at around 16 billion KRW.

Regarding the Chinese business, performance is expected to be weak due to lockdown effects. Sales at the Wuxi subsidiary are estimated to decline by about 26% year-on-year, but through client portfolio management, the deficit scale is expected to remain at the same level as the same period last year.

Researcher Oh said, "Although lockdown effects were inevitable in Beijing as well, it is judged that both Wuxi and Beijing regions have been experiencing improved business environments since last month," adding, "The North American region is expected to contract due to supply chain issues, but orders from major clients are expected to expand in the second half. Furthermore, the North American region is expected to generate synergies in sales aspects together with Yeonwoo in the future."

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