[Click eStock] "Cosmax Shows Positive Performance in Korea, China, and US... Target Price Raised"

Kyobo Securities Raises Cosmax Target Price to 260,000 Won

...Up 13%

On May 14, Kyobo Securities positively assessed the sales growth rates in Korea, China, and the United States for Cosmax in the first quarter, raising its target price to 260,000 won (+13.04%) while maintaining a 'Buy' investment rating.

Cosmax reported first-quarter sales of 682 billion won (+16% year-on-year) and an operating profit of 23 billion won (+13%), meeting market expectations. Cosmax is a company specializing in cosmetics ODM (Original Development Manufacturing).

Sales and operating profit in Korea reached 423.2 billion won (+16.6%) and 38 billion won (+10.8%), respectively. The basic skincare segment performed better than expected, but the color cosmetics segment was sluggish due to weak exports by client companies. However, key top clients such as The Founders, APR, 4Company, and Binau drove strong performance in categories like gel mask packs, packs, mists, and sun care products.

With global brands increasingly outsourcing ODM, direct exports rose by 30% year-on-year. Although profitability declined slightly compared to the same period last year, this appears to be a temporary effect resulting from the share of basic skincare sales increasing from 50% to 64%.

Sales in China grew by 19.7% year-on-year to 194.7 billion won. In Shanghai, where demand for color cosmetics is high, customer companies' new products gained popularity based on strong competitiveness in color cosmetics, leading to improved profitability. In Guangzhou, the number of export clients increased.

Sales in the United States were 42 billion won (+46.3%), delivering stronger-than-expected results. This was due to both new and existing products expanding amid an increase in business clients in the second half of last year. Kyobo Securities analyst Kwon Woojeong commented, "The company is experiencing a lock-in effect due to short lead times and innovation," adding, "It is expected to reach break-even from the second quarter."

The sales growth rate is also expected to remain positive in the second quarter. For its second-quarter guidance, Cosmax forecast mid-teen percent growth in Korea, 20% in China, over 30% in the United States, 20% in Indonesia, and close to 0% in Thailand compared to the same period last year.

Analyst Kwon stated, "The previously concerning markets of China and the United States have seen significant sales rebounds, marking a turnaround, and Indonesia is also expected to perform positively from the second quarter." He added, "Although the drop in profitability in Korea compared to last year is somewhat disappointing, margins are expected to improve quarter-on-quarter in the second quarter, led by the strength of the sun care and cream-dominated basic skincare category, with stabilization expected in the second half of the year."

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