[Click eStock] "Pumtek Korea, Value Appeal Highlighted by Expansion of Existing and New Clients"

Expansion of Small and Emerging Brands' Presence in the Recent Cosmetics Market
Maximizing Profit Leverage through Securing Numerous Clients
Q1 Operating Profit Exceeds Market Consensus

Hanwha Investment & Securities analyzed on the 8th that Permtek Korea's valuation attractiveness will be further highlighted due to the recovery and expansion of overseas sales of existing customers and the expansion of new customers. They maintained a 'Buy' investment rating and a target price of 38,000 KRW. Permtek Korea's closing price on the previous trading day was 27,350 KRW.

Researchers Han Yujeong and Lee Dayeon of Hanwha Investment & Securities stated, "Permtek Korea has a diversified customer base, resulting in relatively low stock price volatility," and added, "The positions of small and medium-sized, newly established indie brands are expanding commonly in major cosmetics markets, which aligns with market trends." They also said, "Based on premold technology, the company proactively proposes products to customers, gaining pricing advantage and securing numerous customers, which is expected to maximize profit leverage."

Permtek Korea's first-quarter sales were 76.9 billion KRW, and operating profit was 10.2 billion KRW, exceeding the market consensus (average forecast) of 9.5 billion KRW in operating profit. By customer, sales to small and medium-sized indie brands increased by 27% compared to a year ago, and the sales proportion from customers other than the domestic Big2 increased by 3%. By category, growth was notable in stick types (11%), compact types (28%), and pump containers (38%). On the other hand, the dry product segment saw a 23% decline in sales due to portfolio restructuring and continued to incur losses.

Researchers Han Yujeong and Lee Dayeon said, "The expansion of overseas sales channels for Korean brand companies is still in its early stages," adding, "Brands that experienced significant fluctuations last year due to high exposure to China have now entered a clear recovery phase, and orders for the pump division to Japan, which had contracted due to the previous year's base effect, are expected to recover sales through the expansion of new customers." The dry product division, which continued to incur losses from the fourth quarter of 2023 through the first quarter of 2024, is expected to reduce its deficit due to management efficiency improvements.