[Click eStock] "Korea Kolmar, Only Stable Earnings Growth Remains"

[Asia Economy Reporter Kwon Jaehee] Kiwoom Securities maintained a 'Buy' investment rating on Korea Kolmar on the 28th and raised the target price to 61,000 KRW.

Korea Kolmar's Q4 sales amounted to 479.1 billion KRW, and operating profit was 8.6 billion KRW, with sales increasing 19% year-on-year while operating profit decreased by 67%. Net loss was 47.4 billion KRW, turning to a deficit and falling short of market expectations.

Sojeong Cho, a researcher at Kiwoom Securities, analyzed, "Domestic cosmetics business sales maintained a steady growth trend, but one-time costs related to HK Innoen's K-CAB commission and irregular labor costs (4.4 billion KRW) increased selling and administrative expenses, resulting in a profit decline."

Due to the application of conservative accounting standards for overseas subsidiaries, non-operating expenses related to asset impairment losses of approximately 58.7 billion KRW occurred, leading to a net loss.

By segment, domestic cosmetics sales (on a separate basis) recorded 163.9 billion KRW in sales and 21.4 billion KRW in operating profit. Although costs increased due to performance bonuses, operating profit showed growth due to increased orders through various channels and improved product mix effects.

For overseas cosmetics, North America recorded 18.6 billion KRW, and the China subsidiary recorded 31.3 billion KRW. North America increased by 42% year-on-year, while the China subsidiary decreased by 8%.

Yeonwoo's sales were 25.8 billion KRW, down 27% year-on-year, recording an operating loss of 600 million KRW and turning to a deficit. HK Innoen recorded sales of 216.3 billion KRW and operating profit of 8.4 billion KRW.

Researcher Cho said, "With the cost reflection almost completed by the end of Q4, only growth remains this year. Domestically, sales activities will focus on high-margin products, and the performance of overseas subsidiaries and the subsidiary Yeonwoo, which had been sluggish, is also expected to improve."