[Click eStock] "Cosmax, Popularity of Korean Indie Brands... Target Price Up 13%"

Korea Investment & Securities Report

On the 29th, Korea Investment & Securities maintained its buy rating on Cosmax and raised the target price by 13.6% from the previous level to 125,000 KRW. This is because the reopening effect has increased the popularity of Korean indie brands, leading to an expected solid sales performance from the Korean subsidiary this year.

Among Korean indie brands, Joseon Beauty and Witch Factory are receiving significant attention. Some of the products from Joseon Beauty and Witch Factory are currently being produced by Cosmax. The rapid increase in the number of indie brands in Korea is attributed to the short production lead time and the ability to produce high-quality products by domestic cosmetics manufacturers.

Myungjoo Kim, a researcher at Korea Investment & Securities, said, “Korea has many cosmetics manufacturers relative to its small retail market, resulting in fierce competition among companies. Cosmax, the top company, is one of the hidden heroes leading K-Beauty.”

In the U.S., the popularity of indie brand cosmetics has also risen, and the proportion of ODM is estimated to have increased rapidly. Researcher Kim analyzed, “Considering that Korean content, which is popular worldwide, continues to emerge, the Korean Wave (Hallyu) will last for a long time, and the beauty trend led by indie brands is just beginning.” The region where Korean indie brands’ popularity is explosively increasing is Southeast Asia. Cosmax has subsidiaries in Indonesia and Thailand and has secured local production plants.

However, despite the lifting of China’s zero-COVID policy, the sluggish sales of the subsidiary in the first half of the year is a disappointing point. This is due to overstock issues faced by cosmetics distribution companies in China. Researcher Kim analyzed, “Starting from the 618 shopping festival, cosmetics and distribution companies in China likely reduced their inventory significantly, which will lead to a recovery in Cosmax’s sales in China.”

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