Cosmax Expected to Exceed Q1 Earnings Estimates... Target Price Upward Revised

[Asia Economy Reporter Jang Hyowon] An analysis has emerged that Cosmax is expected to record higher-than-anticipated performance in the first quarter of this year.

According to a report by Daishin Securities on the 18th, Cosmax's consolidated sales for the first quarter of this year are projected to be 350.5 billion KRW, a 7% increase compared to the same period last year. Operating profit is expected to rise 44% to 23.2 billion KRW during the same period, exceeding the market consensus of 18.6 billion KRW.

Domestic sales are estimated to slightly decrease due to the base effect from hygiene product performance last year, but excluding this impact, sales are expected to have remained at the previous year's level. Notably, the mood in March reversed compared to January and February, suggesting gradual improvement throughout the year.

Sales in the China segment increased by 42%, driving overall performance. The operating profit margin maintained the previous quarter's level and showed significant improvement compared to the same period last year, likely leading the first quarter performance surprise.

This is attributed to the market environment where penetration of major e-commerce platforms in China is expanding, allowing mid-to-low priced emerging brands to strengthen their positions. In particular, the expansion of contributions from new clients and increased order volumes from existing clients are expected to result in substantial improvements in both scale and profitability.

In the United States, sales are expected to continue a slight downward trend, and operating losses are also anticipated to increase. The sales decline trend is expected to continue through the second quarter, with a rebound anticipated in the second half of the year.

Han Yujeong, a researcher at Daishin Securities, stated, “Although the profit and loss of the U.S. corporation was conservatively estimated for the first half, the strong performance of the China corporation led us to raise the earnings estimates for this year and next year. Accordingly, we have raised the target stock price by 6% to 170,000 KRW from the previous level.”