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Title: Earnings Surprises Fuel Bullish Momentum for Kolmar Korea Amid Peak Season
Market Overview: Navigating Key Players and Unexpected Performances
As we delve into the 1Q25 financial landscape, Kolmar Korea has emerged as a standout performer, delivering results that have exceeded market projections. Let's break down the performance across Korea, China, and the US, which has bolstered investor confidence and appetite.
Key Financials: Unpacking the Numbers
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Kolmar Korea's Stellar Growth
- Revenue: KRW 653.1 billion (+14% YoY)
- Operating Profit: KRW 59.9 billion (+85% YoY)
This signals a robust growth trajectory leveraging operating efficiencies primarily across key markets.
Regional Insights:
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Korea: Sun Care Shines Bright
- Domestic Sales: KRW 274.3 billion (+11% YoY)
The substantial YoY growth is attributed to the explosive demand for sun care products, particularly indie brands. As the sun care market gears up for a peak season, legacy brands' shrinkage presents both a challenge and opportunity, with indie brands capturing market share. The Hero SKU mix has played a pivotal role in achieving an all-time high Q1 margin of 12.4%.
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China: Reversal of Fortunes
- Sales: KRW 41.6 billion (+20% YoY)
- Operating Profit: KRW 3.1 billion (+72% YoY, OPM 7.5%)
Overcoming last year's hurdles related to unit price negotiations, Kolmar Korea is witnessing rejuvenated sun care orders. This shift bodes well for sustained momentum in the coming quarters.
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US: Robust Expansion and Profit Scaling
- Sales: KRW 21.7 billion (YoY +210%)
- Operating Profit: KRW 1.5 billion (YoY positive, QoQ +300 million won, OPM 6.9%)
The US market illustrates a success story of strategic expansion, with significant orders bolstering growth. The addition of new base makeup portfolios has proven to be a winning strategy, as profitability trends upwards for the second consecutive quarter.
Strategic Outlook: Bullish Signals on the Horizon
Kolmar's strategic focus on sun care coupled with intensified US market operations underscores a potential valuation uplift. The imminent completion of a second plant in the US by June signals enhanced production capacity and potential tariff advantages, driving our upward revision of the US revenue forecast to KRW 90 billion.
Investment Thesis: Riding the Momentum
We are revising our price target to KRW 110,000 from KRW 92,000, reflecting enhanced earnings forecasts and industry valuations. The stock, trading at 14x 12FM PER, constitutes an attractive buy for investors seeking growth potential intertwined with operational excellence.
This tailored report format navigates the intricate details of regional performance, operational strategies, and forward-looking statements to inform and enable informed investor decisions.
