[Click eStock] "Cosmecca Korea, Expecting Improvement in Performance of All Subsidiaries"

On the 23rd, Kiwoom Securities expressed expectations for performance growth across all regional subsidiaries of Cosmecca Korea and forecasted that this trend will continue into next year.

Cosmecca Korea's consolidated sales for the third quarter of this year are expected to reach 118.3 billion KRW, a 14% increase compared to the same period last year, and operating profit is projected to be 11.6 billion KRW, a 296% increase, surpassing market expectations. Sojeong Cho, a researcher at Kiwoom Securities, explained, "This is thanks to profit improvements in both domestic and overseas subsidiaries," adding, "Domestic subsidiary sales are expected to record 64.5 billion KRW, a 13% increase compared to the same period last year."

The sales growth of the domestic subsidiary is attributed to new orders for cleansing products from new domestic clients and increased export volumes from existing clients. As a result, the proportion of low-margin products is shrinking, leading to expected performance improvements.

Sales from the China subsidiary are anticipated to reach 14 billion KRW, a 27% increase compared to the same period last year. Researcher Cho stated, "Regardless of market conditions, this is due to inventory depletion by existing major clients," and added, "This is expected to reduce fixed cost burdens, making it highly likely that the subsidiary will turn profitable starting this quarter."

Sales from the U.S. subsidiary are expected to reach 52.8 billion KRW, a 23% increase compared to the same period last year, with analysis indicating continued growth in orders from indie brand clients such as Amazon and Ulta Beauty.

Cosmecca Korea's consolidated sales for this year are projected to increase by 17% year-on-year to 468.2 billion KRW, and consolidated operating profit is expected to rise by 321% to 43.7 billion KRW. Sales growth is anticipated to be robust across all domestic and overseas subsidiaries, with profits improving accordingly. This trend is likely to continue into next year.

Next year, the domestic subsidiary is expected to benefit from increased export volumes from small and medium-sized brand companies. Researcher Cho commented, "As the K-beauty trend continues to grow centered on mass and masstige brands, orders from the company's clients are expected to increase," adding, "This is expected to lead to mix improvement and operating leverage effects."

Regarding the U.S. subsidiary next year, the indie brand trend in the U.S. is expected to continue, with sales of SUN products projected to increase. This is expected to drive performance growth due to an increased proportion of high-margin products. The China subsidiary is already showing effects of structural improvement. If market demand improves and order volumes increase, profits are highly likely to improve significantly due to a low base and operating leverage effects.

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