[Click eStock] "Kolmar BNH, Time to Lower Expectations for China Sales"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating on Kolmar BNH on the 21st and set a target price of 50,000 KRW.

The company launched a blood sugar treatment product using the individually recognized raw material 'Yeoju' in early April and plans to release a women's menopause product using the individually recognized raw material 'Rhubarb Root Extract' in May. The domestic diabetes treatment market is estimated to be about 500 billion KRW. The menopause market has seen no clear hit products since the 'Baeksuo' incident.

Sim Eunju, a researcher at Hana Financial Investment, said, "If the new products settle in the market, meaningful contributions to earnings can be expected," but added, "However, expectations for exports to China this year should be lowered." Since March, major cities in China have been under lockdown, making active sales activities difficult in the first half of the year. Sales in China, including 'Gangso Kolmar,' are estimated to increase from 70 billion KRW last year to 90 billion KRW this year. Researcher Sim added, "It is disappointing because there were expectations for a significant earnings level-up due to the rapid increase in membership before COVID-19."

In the first quarter, the company's consolidated sales and operating profit are estimated to have recorded 160.8 billion KRW and 26.3 billion KRW, respectively, down 7.5% and 7.4% year-on-year. Food and cosmetics sales are expected to increase. The expansion of private brand SKUs in large supermarkets is judged to have a positive impact on sales. Cosmetics are expected to be affected by inventory adjustment issues due to new product launches until the first quarter, while exports to China are forecasted to be around 16 billion KRW, similar to the fourth quarter of last year.

Researcher Sim said, "Kolmar BNH's stock price has risen 33% from its recent bottom," explaining, "Although Atomy's sales activities were significantly restricted during the COVID-19 period, expectations for earnings improvement have been reflected in the stock price as social distancing measures have been lifted."