[Click eStock] "Clio, Steady Sales Growth... Top Pick Among Small and Mid-sized Cosmetics"

Report from Shinhan Investment Corp.

Shinhan Investment Corp. judged on the 10th that Clio is showing a growth trend in its performance. Accordingly, it maintained a buy rating and kept the target price at the previous 30,000 KRW.

Clio announced that its Q1 consolidated sales and operating profit reached 75.1 billion KRW and 5.2 billion KRW respectively, increasing by 13.85% and 44.05% compared to the same period last year. Net profit for the same period recorded 5.7 billion KRW, up 624.12%.

Hyunjin Park, a researcher at Shinhan Investment Corp., said, “In Korea, sales through the H&B (Health & Beauty) channel centered on Olive Young grew 37% year-on-year, driving the company's overall performance. Sales in Southeast Asia and North America increased by 107% and 73% respectively, reaching 3.8 billion KRW and 5.3 billion KRW.” He added, “Although sluggish sales in China and Japan slowed the global quarterly sales growth, this is a desirable trend in terms of regional diversification.”

Researcher Park analyzed, “Sales are increasing through Southeast Asia’s Shopee and Lazada, and North America’s Amazon channels, making Clio’s performance growth in Southeast Asia and North America the strongest among small and medium-sized cosmetics companies.”

He stated, “In Q2, domestic, North American, and Southeast Asian performances are expected to continue growing steadily. Although Japan’s performance recovery compared to last year remains difficult, it is understood that performance is rebounding compared to the previous quarter.”

He also said, “The Gudal brand, with its Cheonggyul Vita C Blemish Care Serum as a flagship product, is showing strong growth across all regions. The Peripera brand has a high sales proportion in the U.S. and Southeast Asia, and lip products are very popular.”

Researcher Park added, “In the mid to long term, channel expansion is expected in North America from Amazon-centered distribution to Walmart and Target, and Japan is preparing for a launch on Amazon Japan, so performance is expected to improve compared to before. At this point, where demand for color cosmetics may be highlighted due to the endemic, the company’s domestic and overseas sales growth is steady, reflecting market trends smoothly.”

He continued, “While other cosmetics companies showed lower-than-expected Q1 performance improvements due to sluggish duty-free and Chinese local demand recovery, Clio is showing very favorable growth. Although there is some valuation burden, the sector’s performance growth is strong, leaving room to raise future performance expectations. Therefore, we maintain our top small and medium-sized stock preference in the cosmetics sector.”