Cosmax Forecast to Post 53% Rise in Third-Quarter Operating Profit; Target Price Raised to 340,000 Won

[Financial News] Korea Investment & Securities forecast that Cosmax will report results in line with market expectations in the third quarter, supported by strong exports of Korean cosmetics. The brokerage maintained its Buy rating and raised its target price from 300,000 won to 340,000 won.
Myung-joo Kim, an analyst at Korea Investment & Securities, estimated in a report on the 21st that Cosmax's third-quarter consolidated revenue would rise 34.5% year on year to 787.7 billion won. Operating profit was projected to increase 53.4% to 65.6 billion won, with an operating margin of 8.3%.
Revenue at the Korean subsidiary was expected to rise 37.4% to 527.1 billion won, while operating profit was projected to increase 67.2% to 57.3 billion won. Kim explained that Cosmax's clients were also recording solid sales, barring company-specific factors that could weigh on their performance, as strong exports of Korean cosmetics continued.
Kim said, "As economic uncertainty in Indonesia has persisted recently, we assumed a more conservative revenue growth rate than the company's guidance." However, he expected revenue at the Thailand, China and United States subsidiaries to increase 31%, 22.3% and 46%, respectively, maintaining solid momentum following the second quarter.
Kim forecast that the global shopping season would support fourth-quarter results. Walmart's Deal Days, Amazon's Prime Day, Target's Target Circle Deal Days, Alibaba's Singles' Day, Black Friday and Cyber Monday are scheduled to take place one after another.
Kim said, "Despite export-unfavorable conditions, including a stronger won and rising transportation and fuel costs, exports of Korean cosmetics have continued to set new all-time highs since the second half began." He added, "Given the shopping season in the second half, exports of Korean cosmetics are highly likely to remain solid."
The target price increase reflected improving conditions in the cosmetics industry and Cosmax's steady growth in new orders. Korea's cosmetics have continued to gain popularity worldwide, and global retailers have also recognized this trend, leading the brokerage to expect favorable market conditions to continue.
Kim said, "Industry conditions are at an all-time high, but Cosmax's stock is currently down 11% from its previous peak, and its valuation is also below the level seen at that peak." He added, "With the risks related to the cross-listing of subsidiaries also gone, it is time for Cosmax's stock price to catch up with the industry conditions."

[email protected] Jung-hwa Lee Reporter