Bullink Portfolio: Kolmar Korea's Resilient Growth Trajectory
In-Depth Report: Q1 2025 Performance Across Korea, China, and the US
Key Highlights:
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Robust Earnings Growth: Kolmar Korea surpassed market expectations in 1Q25, recording a revenue of KRW 653.1 billion, a significant 14% year-on-year increase, and an impressive operating profit spike of 85% YoY, reaching KRW 59.9 billion.
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Sun Care Sector Leading Domestic Growth: Strong domestic performance was driven by indie brands in the sun care segment, with sales climbing to KRW 274.3 billion, an 11% YoY increase. As legacy brands see a decline, indie brands continue to capture market momentum, paving the way for sustained top-line growth.
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China's Unexpected Turnaround: China reported substantial gains with sales reaching KRW 41.6 billion, a 20% YoY growth. Operating profit soared by 72% YoY, indicating a positive shift from last year’s challenges related to price negotiations, with a rebound in sun care orders.
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Thriving US Performance: The US showcased stellar growth with sales of KRW 21.7 billion, a remarkable 210% YoY increase. With new product launches and customer acquisition, the US market demonstrates a promising profitability trajectory.
Strategic Insights:
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Valuation and Earnings: Kolmar Korea’s stock momentum is currently powered by the buoyant sun care segment and strategic expansion in the US. The anticipated completion of the second plant in the US by June positions the company to capitalize on domestic production post-tariff policy shifts.
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Guidance and Market Projections: We have raised our 2025 US revenue projection from KRW 80 billion to KRW 90 billion, reflecting the robust orders of Plant 1 and the promising sales trends of Plant 2.
Investment Outlook:
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Revised Price Target: Kolmar Korea’s price target is adjusted to KRW 110,000 from KRW 92,000, aligning with increased earnings projections (25F domestic OPM at 12.5%) and an elevated valuation atmosphere reflective of industry multiples.
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Market Position: Trading at a favorable 14x 12-month forecasted P/E ratio, Kolmar Korea offers an attractive investment opportunity with strong buy recommendations sustained.
Conclusion: Kolmar Korea exemplifies resilience and adept market maneuvering, with favorable forecasts underpinned by strategic initiatives across key regions. The sun care division's growth trajectory, coupled with US expansion, positions the company for sustained profitability and market leadership.
Example Case:
A comparative scenario can be drawn to Seoul BioScience, which in Q1 2022, faced a similar growth trajectory in their dermal care line, driving a 60% YoY revenue increase and a strategic shift in market positioning post their acquisition of a US-based biotech firm. Like Kolmar Korea, Seoul BioScience benefited greatly from sector-specific growth, leading to a revised price target that enticed significant investor interest.
