[Click eStock] 'HK Innoen' Falls Below Even Lowered Expectations

[Asia Economy Reporter Junho Hwang] KB Securities maintained the target price of Korea Kolmar at 55,000 KRW after analyzing the company's performance in the first quarter of this year.

Korea Kolmar's consolidated sales in Q1 reached 410.4 billion KRW, a 4% increase compared to the previous year. Operating profit was 12.9 billion KRW, down 47% year-on-year. Sales met consensus estimates, but operating profit fell short by 44%.

Domestic sales increased by 5% compared to the previous year, while operating profit decreased by 9%. Excluding a 2.6 billion KRW increase in performance bonuses, operating profit was 17 billion KRW, which was in line with initial expectations. In the China business, an operating loss of 2.7 billion KRW was recorded, and North America also posted an operating loss of 1.9 billion KRW.

HK Innoen's sales fell by 4%, and operating profit decreased by 68%, showing significant weakness. This was analyzed to be due to increased depreciation expenses caused by delays in the new plant's operation start, expanded marketing costs related to new beverage and health supplement products, and inventory adjustments ahead of the launch of the new K-Cab formulation (orally disintegrating tablet).

Researcher Shinae Park of KB Securities stated, "HK Innoen is a listed subsidiary of Korea Kolmar, so its impact on Korea Kolmar's stock price is relatively limited. For a sustained rebound in the stock price, steady growth in the core business (cosmetics ODM) sales and especially improvement in the profitability of overseas (China/North America) subsidiaries will be necessary."