Broke Through Global Luxury Brands... This Stock Delivers an 'Earnings Surprise' [Weekend Money]

KOLMAR KOREA Achieves Record-High Quarterly Results Driven by Strong Domestic Skincare Growth
Expansion of Global Luxury Brand Orders and Visible Turnaround Lead to Higher Target Price

KOLMAR KOREA posted first-quarter results this year that surpassed market expectations. With rapid growth in its domestic business and improved profitability in its U.S. subsidiary, the securities industry is evaluating that the company's foundation for mid- to long-term growth is being strengthened. Accordingly, Hanwha Investment & Securities raised its target price for KOLMAR KOREA by 9% to 120,000 won.

Yujeong Han, a research analyst at Hanwha Investment & Securities, commented, "Both Korea and the United States performed better than expected," adding, "It is important to note that beyond a short-term earnings surprise, the company is laying the groundwork for long-term growth through changes in its client structure and building references with global multinational corporations."

According to Hanwha Investment & Securities, KOLMAR KOREA's consolidated sales for the first quarter of this year reached 728 billion won, up 11.5% year-on-year, while operating profit rose 31.6% to 78.9 billion won. This surpasses the market consensus operating profit estimate of 66.2 billion won.

In particular, the performance of the standalone domestic subsidiary was notable. As sales to major Korean clients and global multinational luxury brands were fully reflected, skincare sales surged by 43% compared to the same period last year. As a result, standalone operating profit increased by 51.2% to 51.2 billion won, and the operating margin rose by 2.5 percentage points to 14.9%, marking record-high quarterly results in both sales and profitability.

Analyst Han stated, "The high sales growth of the standalone subsidiary is likely to continue throughout the year," explaining, "This is not just due to increased orders from certain clients, but because the client base is expanding and the growth intensity of major clients is rising."

She further explained, "The expansion of orders from global multinational luxury brands, which have been conservative about using original design manufacturing (ODM), is significant. If these orders result in strong sales performance, it could lead to additional orders from other global multinational corporations."

Although the U.S. subsidiary still has a relatively small absolute performance, an improving trend has emerged. Due to a decrease in orders from its largest client, sales fell by 38.4% year-on-year to 13.4 billion won, but as the initial cost burden from operating its second plant peaked, the operating loss was reduced to 3.7 billion won. Compared to the previous quarter, the deficit shrank by 4.6 billion won.

Analyst Han commented, "Although the absolute performance in the U.S. remains low, sales to the largest client are recovering compared to the second half of last year, and with the addition of new clients at the second plant, a faster-than-expected turnaround is possible." She added, "The visibility is also high, as new client acquisitions are mainly from clients who already have business experience with KOLMAR KOREA in Korea."

The market is also focusing on the possibility of increased cost pressures. While KOLMAR KOREA was not affected by the Iran crisis in the first quarter, there is a possibility of some cost increases from the second quarter onward. However, due to the nature of the cosmetics ODM and original equipment manufacturing (OEM) businesses, price pass-through by product is possible, so the impact on profitability is expected to be limited.

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