Kolmar Korea's Orders Remain Solid Despite Tube Container Shortage; Target Price Raised to KRW 185,000

[Financial News] Yuanta Securities Korea maintained its Buy rating on Kolmar Korea, saying the company continues to see solid order intake despite disruptions in the supply of tube containers. It raised its target price from KRW 160,000 to KRW 185,000.
In a report released on the 29th, Yuanta Securities Korea analyst Seung Eun Lee projected Kolmar Korea's third-quarter consolidated revenue at KRW 833.6 billion, up 22% from a year earlier. Operating profit was expected to rise 67.6% to KRW 97.7 billion, slightly exceeding the market consensus of KRW 92.1 billion. Revenue from the Korean standalone entity was estimated at KRW 430 billion, up 34% year on year, while operating profit was projected at KRW 68 billion. The operating margin was expected to reach 15.8%.
When Kolmar Korea announced its second-quarter results, it expected third-quarter order intake to exceed that of the previous quarter. However, taking into account a five-day reduction in business days due to the summer vacation period, the company set its third-quarter revenue guidance at KRW 430 billion, similar to the previous quarter.
"Expectations that revenue would exceed guidance rose on increased order intake, but third-quarter revenue is expected to remain at the guidance level because of disruptions in the supply of tube containers," Lee said. "As demand remains solid, unshipped volume from the third quarter could contribute to fourth-quarter revenue depending on tube supply conditions."
By product category, the share of revenue from sun-care products, which drove growth in the second quarter, was expected to decline, while the share of skin-care products would increase. The China entity was projected to post revenue of KRW 34 billion and operating profit of KRW 1.5 billion amid foreign-exchange pressures and slowing profitability.
YONWOO was estimated to generate revenue of KRW 81 billion and operating profit of KRW 500 million as demand for sun-care pump containers slowed after peaking in the second quarter.
Fourth-quarter revenue from the Korean standalone entity was projected to reach KRW 370 billion, up 38% from a year earlier. The estimate reflects increased order intake and unshipped volume from the third quarter. However, the timing of the volume's contribution to results could vary depending on tube supply conditions.
The target price was calculated by applying a target price-to-earnings ratio (PER) of 19 times to the next 12 months' earnings per share (EPS). The average PER from June through August 2024 was used, when both order intake and production capacity at the Korean entity were expanding.
"Rising orders from existing cosmetics brands with larger sales volumes and the expansion of new projects from global customers are expected to support earnings growth in 2027," Lee said.

[email protected] Jung Hwa Lee Reporter