[Click eStock] "Cosmax, Weak Performance in China... Target Price Down"

On the 14th, Samsung Securities slightly lowered the target price for Cosmax from 179,000 KRW to 179,000 KRW. The investment rating was maintained at 'Buy.'

Cosmax recorded sales of 458.3 billion KRW and an operating profit of 43.3 billion KRW in the third quarter. These figures represent increases of 15.5% and 68.7%, respectively, compared to the same period last year. Although operating profit significantly increased due to high growth in domestic corporate sales, it fell short of market expectations. This was due to poorer-than-expected performance in China. The decline in Chinese sales reached 20%. Unlike previous years, when the effect of China's Singles' Day was reflected as early as the third quarter, this year it was almost absent. Cosmax explained that orders related to customers' Singles' Day responses were placed later in October than usual, but Samsung Securities viewed this not as a delay in orders but as a reduction in the overall scale compared to previous years.

Since the beginning of this year, Original Design Manufacturing (ODM) companies have recorded high sales and profit growth domestically. This strong demand is expected to continue into next year. However, the production capacity of ODM companies remains a key issue. Cosmax's manufacturing plant, which began construction in mid-2021, was recently completed, and sales are expected to surpass 2 trillion KRW for the first time next year. Nevertheless, weak demand in China remains an obstacle.

Park Eun-kyung, a researcher at Samsung Securities, stated, "We are lowering our performance expectations for China and revising down next year's operating profit forecast by 3%."

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