"I Thought It Was a Stock Pullback and Sold..." U.S. Shopping Season Is Near, and K-Beauty's Big Four Are Riding the Wave [Weekend Money]

Korea Investment & Securities: "Recommend Cosmax, APR, and others"

A securities firm has forecast that the earnings of Korean cosmetics companies will also show a positive trend in the second half of the year as shopping events by major U.S. retailers, including Amazon, get underway in earnest.

“As expectations for COSMAX’s third-quarter earnings have risen ahead of the start of the shopping season in earnest, the cosmetics sector is beginning to pick up again,” Kim Myeongju, a researcher at Korea Investment & Securities, said in a report. “Along with COSMAX, we recommend focusing on APR and d’Alba Global, which have attractive valuations, as well as Kolmar Korea, whose expectations have finished adjusting.”

Korea Investment & Securities forecast that COSMAX would post consolidated third-quarter revenue of KRW 821.4 billion, up 40.3% from a year earlier, and operating profit of KRW 75.9 billion, up 77.6%. These figures would exceed market expectations by 7.5% and 12.1%, respectively. The firm raised its earnings estimates and lifted its target price from KRW 340,000 to KRW 370,000.

Other cosmetics companies are also expected to post solid earnings. Korea Investment & Securities estimated that Kolmar Korea would report third-quarter revenue of KRW 834 billion, up 22.1%, and operating profit of KRW 92 billion, up 58.6%. For the same period, it forecast revenue of KRW 174 billion, up 52.63%, and operating profit of KRW 34 billion, up 100%, for d’Alba Global, and revenue of KRW 718 billion, up 86%, and operating profit of KRW 177 billion, up 84.4%, for APR.

“Last week, share prices were adjusted because of a gap between the pace of companies’ earnings improvement and market expectations. However, this was a healthy correction amid a boom in Korea’s cosmetics industry that was stronger than the market had anticipated,” Researcher Kim said. “Third-quarter results from major brand companies are expected to come in better than feared, as solid revenue trends will partly offset the negative effects of the won’s strength.”

The trend is expected to continue as major U.S. retailers begin their shopping-event season this week. Adobe expects online consumer spending in the United States this month to rise 8% year on year to $95.8 billion, driven by retailers’ shopping events. It forecast that spending during Amazon’s Prime Day period would increase 9.2% to $9.9 billion. It is also worth noting that, according to global research firm CivicScience, Prime Day members have become more inclined to purchase beauty and health products.

“October shopping events hosted by U.S. retailers, which herald the start of the year-end shopping season, are more likely to be successful than last year. As evidence of this, Korea’s cosmetics exports in September hit a record $1.21302 billion, up 26.2% year on year, led by exports to the United States, which also reached a record, rising 21.0%,” Researcher Kim said.

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