[Click eStock] Kolmar Korea, Expecting Trendy Stock Price Increase Next Year

[Asia Economy Reporter Lee Seon-ae] DB Financial Investment announced on the 23rd that it maintains a buy rating and a target price of 45,000 KRW for Korea Kolmar. Based on the previous day's closing price, the upside potential is 19.4%. This assessment is due to the steady influx of new clients at both domestic and Chinese subsidiaries.

Heo Jena, a researcher at DB Financial Investment, stated, "It is important to note the increase in new clients at both domestic and Chinese subsidiaries," adding, "The domestic subsidiary maintains a stable order volume from core clients, and with additional orders from home shopping and H&B stores, steady external growth continues." Furthermore, she viewed the reduction in dependence on a single buyer as significant.

She also pointed out that the performance of the Wuxi subsidiary in China is impressive. Researcher Heo said, "For cosmetic Original Design Manufacturers (ODM), securing market-leading brands as clients is crucial. Over the past 1-2 years, brand recognition in China has improved, leading to expanded orders from high-growth brands, which have been established as top 3 clients. This is highly valued," and analyzed, "In response to the challenging market environment, buyers are demanding short delivery times with low inventory levels, and the company has proven its production responsiveness."

She continued, "If steady sales growth and meaningful profit improvement become visible, centered on the Wuxi subsidiary, it will serve as a positive momentum for a trend-based stock price increase alongside the normalization of the Chinese market next year."

Meanwhile, Korea Kolmar's sales for the third quarter of this year reached 473.5 billion KRW, a 25.9% increase year-on-year, and operating profit was 18.1 billion KRW, up 41.6%, both falling short of expectations. A merger compensation fee of 4.4 billion KRW and acquisition advisory fees of 2 billion KRW were incurred from the newly consolidated Yeonwoo, and a conservative accounting treatment for long-term bonds at the Chinese subsidiary resulted in a bad debt write-off of 3.7 billion KRW.

Domestic sales grew 23.8% year-on-year. Sales to top clients remained solid, with additional growth from new clients. Chinese sales decreased by 10.8% year-on-year, continuing to incur losses. The sporadic lockdowns and deferred demand from the Singles' Day (Guanggunjie) had a significant impact. North American sales increased by 17.8%, with a slight increase in operating losses. During the same period, HK Inno.N's sales and operating profit increased by 5% and 29.8%, respectively. Profitability improved due to milestone recognition from entering follow-up clinical trials in the U.S., strong sales of Condition, and profit contributions from Beewants.

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