[Click eStock] "Korea Kolmar, Domestic Subsidiary Growth and Overseas Subsidiary Defense... Profitability Improvement Expected"

[Asia Economy Reporter Kwon Jae-hee] Ebest Investment & Securities maintained its 'Buy' rating and target price of 58,000 KRW for Kolmar Korea on the 24th.

Ebest Investment & Securities judged that although Kolmar Korea was significantly affected by the lockdown in China, there is potential for profitability improvement going forward. The domestic corporation is generating growth centered on private brand products of major H&B companies, derma cosmetics, and home shopping channels, in addition to top domestic clients. The most encouraging aspect is that price negotiations with clients are underway due to rising raw material costs. Furthermore, they expect the domestic corporation's profitability to steadily improve with an increase in orders for high-margin products. China experienced a significant impact from the lockdown in Q2, and it is estimated that the Wuxi corporation recovered up to 90% of April's performance by July.

Orin Ah, a researcher at Ebest Investment & Securities, forecasted, "Since Q3 is the quarter ahead of the November Singles' Day, sales recovery and a reduction in loss size are expected."

HK Innoen, which significantly contributes to Kolmar Korea's performance, is expected to continue a favorable trend with sustained growth in K-CAB prescription performance, steady MSD vaccine sales, and entering a leverage zone due to stabilization of the new infusion solution plant. Additionally, Kolmar Korea plans to open a North American Technology Sales Center in New Jersey, USA, within the year, which is expected to strengthen its business in the North American region and utilize the sales capabilities of its subsidiary, Yeonwoo, which it acquired. With intensifying brand competition in the Chinese market, cosmetic companies need new growth drivers from a mid- to long-term perspective, and in this regard, Kolmar Korea appears to be actively targeting the North American region, the world's largest cosmetics market, as well.

Researcher Oh analyzed, "The solid growth of the domestic corporation, performance defense of overseas corporations, and high growth of HK Innoen are expected to stand out as clear performance momentum within the industry."