Analysts lower target price to 110,000 won, citing valuation appeal ahead of Q3 earnings

Korea Investment & Securities forecasted on the 14th that Kolmar Korea's stock price would show a recovery trend as the valuation, corporate value, appeal is highlighted around the third-quarter earnings announcement.

They adjusted the target stock price downward from the existing 120,000 won to 110,000 won, while maintaining the 'buy' investment opinion. The closing price of Kolmar Korea on the previous trading day was 76,000 won.

Korea Investment & Securities projected that Kolmar Korea's consolidated revenue and operating profit for the third quarter of this year would increase by 14.5% and 27.1% year-on-year, respectively, reaching 717.3 billion Korean won and 69.3 billion Korean won. They estimated that domestic corporate sales would increase by 13.1% year-on-year to 309.5 billion Korean won, with profitability remaining at a similar level to the third quarter of last year, at 13.7%.

Kim Myeong-ju, a researcher at Korea Investment & Securities, said, "As in the second quarter, legacy brands continue to show somewhat disappointing sales trends, but these are offset by indie brands," adding, "Despite the disappointing operating environment, U.S. sales are expected to increase by 10.4% year-on-year, but a one-time cost associated with the establishment of an office in the western region will result in an operating loss of 2.8 billion Korean won."

As the second-quarter earnings of cosmetics companies, including Kolmar Korea, failed to meet the market's high expectations and even the cosmetics export data for last August showed weakness, concerns about a peak-out (post-peak decline) for the sector as a whole have grown. However, Korea Investment & Securities believes it is still too early to discuss a peak-out.

Kim explained, "Cosmetics exports to the U.S. and Europe are recovering faster than expected," adding, "At this point when the U.S. Amazon Prime Big Deal Days, which ended on the 7th to 8th of last month, Korean cosmetics brands are still ranking high."

He added, "The timing is right for the valuation appeal to be highlighted around the third-quarter earnings."

Korea Investment & Securities Maintains 'Buy' on Kolmar Korea