[Click e-Stock] "Kolmar Korea Outperforms Despite Tube Container Shortage... Target Price Raised"

On September 29, Yuanta Securities raised its target price for Kolmar Korea from 160,000 won to 185,000 won, stating that the company's earnings for the third quarter of this year are expected to exceed market expectations despite a shortage of tube containers. The firm maintained its "Buy" investment rating.

Seungeun Lee, an analyst at Yuanta Securities, explained, "The new target price applies a 12-month forward earnings per share (EPS) and a target price-earnings ratio (PER) of 19 times. The target PER is based on the average 12-month forward PER for the June to August 2024 period, during which Kolmar Korea's domestic subsidiary experienced an increase in orders and expanded capacity." Lee added, "The increase in orders from major existing cosmetic brands and the expansion of new projects from global clients are expected to support growth in 2027 earnings."

Kolmar Korea's third-quarter earnings for this year are expected to report sales of 833.6 billion won, up 22% year-on-year, and operating profit of 97.7 billion won, up 67.6%. This is projected to slightly exceed the consensus operating profit of 92.1 billion won. On a separate entity basis, sales are estimated to rise 34% to 430 billion won, while operating profit is expected to increase 15.8% to 68 billion won. Lee noted, "In its second-quarter earnings conference call, Kolmar Korea explained that third-quarter orders are anticipated to surpass those of the second quarter. However, the company maintained its third-quarter sales guidance at a similar level to the second quarter, at 430 billion won, factoring in a five-day reduction in working days due to summer holidays." He went on, "Although expectations for beating this guidance have risen amid an increase in orders, sales in the third quarter are likely to stay around the guidance level due to disruptions in the supply of tube containers." He further stated, "As demand remains resilient, sales for volume not fulfilled in the third quarter could be carried over to the fourth quarter, depending on tube supply conditions."

The Chinese subsidiary is forecast to post sales of 34 billion won and operating profit of 1.5 billion won, constrained by currency headwinds and weakening profitability. Yonwoo is projected to record sales of 81 billion won and operating profit of 500 million won, as demand for pump containers for sun care products peaked in the second quarter and has since softened.

Yuanta Securities forecasts the fourth-quarter sales of Kolmar Korea's separate entity to rise 38% year-on-year to 370 billion won. Lee commented, "This outlook reflects the expanded order book and undelivered volume from the third quarter," adding, "The recognition of undelivered volume in the results will depend on the supply situation for tubes."

This content was produced with the assistance of AI translation services.