[Click eStock] "Kolmar BNH Lowers Earnings Forecast... Target Price Down"

[Asia Economy Reporter Park Jihwan] Ebest Investment & Securities announced on the 26th that it has lowered the target price for Kolmar BNH to 43,000 KRW, reflecting the downward revision of expected earnings and the decline in the average multiples of peer companies. However, it maintains a "Buy" investment opinion, judging that quarterly earnings are likely to recover from the third quarter as the bottom.

Researcher Jo Eun-ae of Ebest Investment & Securities said, "this year, steady export sales in the food sector centered on China are expected to be achieved," adding, "the annual growth rate of food export sales is projected to increase by 37% compared to the previous year." Domestic sales are expected to decline in both food and cosmetics due to some clients' production internalization issues and the impact of COVID-19. Researcher Jo said, "However, with the easing of gathering restrictions due to the With-Corona policy and the continuous acquisition of ODM (Original Design Manufacturer) orders from global brands and new domestic clients, quarterly earnings are judged to have bottomed out starting from the third quarter."

It is analyzed that the current stock price level reflects the lowered expectations for Chinese performance. Since the second quarter of last year, major products have been exported to China through the main client Atomy, with average Chinese export sales from Q2 last year to Q3 this year amounting to about 20 billion KRW. He said, "The expected annual Chinese export sales this year are 76 billion KRW, which is below the early-year guidance of 120 billion KRW due to client inventory depletion issues," adding, "the current stock price level is considered to have removed the premium that was re-rated due to Chinese exports." The number of countries entered outside China is steadily expanding every quarter.

Researcher Jo stated, "For a meaningful stock price rebound in the future, domestic sales recovery and margin improvement need to be realized, and Chinese sales exceeding market expectations should be achieved."