“K-beauty’s heyday has yet to arrive” ... Brokerages rush to raise price targets

[Financial News] The investment appeal of the cosmetics sector is coming into focus, supported by the U.S. second-half shopping season and improving earnings at domestic cosmetics companies.
According to the securities industry on the 8th, Kim Myung-joo, a researcher at Korea Investment & Securities, said, “K-beauty’s heyday has yet to arrive,” and forecast that “shopping events by U.S. retailers and rising exports of Korean cosmetics will support the sector’s growth.” Kim also forecast that Cosmax’s third-quarter results would exceed market expectations and raised its target price by 8.8%, from 340,000 won to 370,000 won.
Major U.S. retailers, including Amazon.com, Inc., are holding shopping events in October. Adobe forecast that U.S. online spending in October would reach $95.8 billion, up 8% from the same period a year earlier, and that spending during Prime Day would reach $9.9 billion, up 9.2%. A survey by market research firm CivicScience also found that more Prime members planned to shop during Amazon’s event than last year, and that their intention to buy beauty products had increased.
South Korean cosmetics exports also hit a record high. September cosmetics exports under HS code 3304 totaled $1,213.02 million, up 26.2% from the same period a year earlier. Exports to the United States rose 21.0% to $246.94 million, setting a new record.
Kim said the recent correction in cosmetics stocks “stemmed from a gap between the pace of companies’ earnings improvement and market expectations,” and assessed it as “a healthy correction” occurring as the Korean cosmetics industry enters a boom larger than expected.
Kim also maintained a positive view of brand companies. Kim saw the solid sales trends at major brand companies as partly offsetting the negative effects of the stronger won, and Kim said third-quarter results could be better than the market feared.
Kim judged that “despite Cosmax’s short-term share price gains, there is further upside potential from upward revisions to earnings estimates.” Alongside Cosmax, she named APR and d’Alba Global, which Kim considered attractively valued, and Kolmar Korea, where adjustments to earnings expectations have been completed, as stocks to watch.

[email protected] Choi Do-sun Reporter