[Click eStock] Korea Kolmar Target Price Revised Upward

[Asia Economy Reporter Junho Hwang] Meritz Securities raised the target price of Kolmar Korea to 70,000 KRW on the 12th. Although the cosmetics sales growth rate is expected to be revised upward by about 6.9% this year due to the recovery from COVID-19, it is considered difficult to expect natural growth beyond the base effect. However, the high growth of K-CAB and the improvement in the performance of the prescription drug sector are expected to be prominent.

Meritz Securities expects Kolmar Korea to record sales of 332.5 billion KRW in the first quarter of this year, down 11.4% year-on-year. Operating profit is also expected to shrink by 2.5% to 29.1 billion KRW. However, net profit is expected to increase by about 32.9% to 16.5 billion KRW.

In particular, it is expected that the performance by business segment will diverge this year. While the core cosmetics segment is expected to be sluggish, the subsidiary's pharmaceutical segment is expected to perform well. For the cosmetics segment, sales and operating profit are forecasted at 159.8 billion KRW (-7.4%) and 12.0 billion KRW (6.8%), respectively. The reason for the sales slump was attributed to the delayed recovery of sales from major clients. Due to an increase in high-priced orders (online, home shopping, Atomy), profits are expected to increase. Regarding the China business, the Wuxi corporation (+70%) is expected to remain strong while the Beijing corporation (-20%) is expected to continue its weak trend, and for the North American business, the operating environment is expected to improve, but the sluggishness in color cosmetics is expected to continue.

On the other hand, for the pharmaceutical segment, the subsidiary HKN is expected to achieve sales and operating profit of approximately 148.7 billion KRW (12.0%) and 22.8 billion KRW (46.5%), respectively. The high growth of K-CAB and the improvement in prescription drugs are expected to be prominent.