On the 8th, Korea Investment & Securities raised the target price for Cosmax from 160,000 KRW to 180,000 KRW, a 12.5% increase, citing a recovery in demand for Chinese cosmetics. The investment rating was maintained as a buy.
Myungjoo Kim, a researcher at Korea Investment & Securities, stated, "We adjusted the application timing of earnings estimates and raised the applied multiple. We believe that the demand for cosmetics among Chinese consumers is recovering more than the current market concerns suggest, and it is now time for Cosmax, which had been struggling due to China, to thrive again in the Chinese market."
In the second half of last year, Cosmax's stock price underperformed compared to other cosmetics companies due to its high sales proportion related to China and the occurrence of bad debt expenses related to accounts receivable. However, this year, demand for cosmetics from Chinese consumers is expected to recover compared to last year. Researcher Myungjoo Kim explained, "In fact, sales in Korea's duty-free industry and the Hainan duty-free zone are showing signs of recovery this year. This recovery in demand for Chinese cosmetics is a factor that will increase Cosmax's valuation."
He added, "The high popularity of Korean indie cosmetics in non-Chinese regions and the resulting solid performance of the Korean subsidiary are factors supporting the downside of Cosmax's stock price."
Accordingly, sales of Cosmax's Korean subsidiary are expected to increase by 21.0% year-on-year this year.
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