J2K Bio, Full Rebound Driven by Popularity of K-Beauty Products

Listed on March 25 after merging with Kyobo 11 SPAC
Active overseas expansion focused on indie cosmetic brands
Growth potential stands out with full-scale external expansion

J2K Bio, a cosmetics raw material developer that merged with Kyobo No.11 SPAC and got listed on the KOSDAQ market in March this year, has seen its stock price rebound since the beginning of this month. This is interpreted as a result of growing expectations that J2K Bio’s performance will improve as domestic cosmetics brands actively expand overseas.

According to the financial investment industry on the 13th, J2K Bio’s stock price rose 25.1% this month, while the KOSDAQ index fell 0.5% during the same period.

J2K Bio has developed over 2,000 natural and bio materials and solvents based on new natural product technologies and fermented microorganisms. It supplies about 300 customers with functional cosmetic new materials for whitening, anti-wrinkle, UV protection, and sebum control, based on ingredients extracted from natural products and fermented microorganisms.

J2K Bio merged with Kyobo No.11 SPAC and entered the stock market on March 25. The merger price per share was KRW 17,267 for J2K Bio and KRW 2,000 for Kyobo No.11 SPAC, with a merger ratio of 1 to 0.1158278. On the first day of listing, the stock price rose to KRW 36,850 but then declined to KRW 11,810 on April 16 as SPAC shareholders realized profits.

J2K Bio’s stock price began to rebound significantly after the first quarter earnings announcement this year. The company recorded consolidated sales of KRW 7.808 billion and operating profit of KRW 843 million in Q1. Sales increased by 43.7% year-on-year, but operating profit decreased by 16.7%. By product category, sales of natural materials increased by 57.1%, and bio materials by 39.4%. Natural materials are rapidly growing as they replace existing chemically synthesized ingredients.

A company official said, "We expect to quickly enter a stable performance zone based on the improved results of our major customers, including OEM and ODM manufacturers and indie brands."

Investors focused on the expansion of scale. Heo Seon-jae, a researcher at SK Securities, explained, "The direct benefits from the expansion of the domestic indie brand market, which is driving recent K-beauty growth, will continue. The sales proportion for indie brands is about 45%." J2K Bio has secured customers such as COSRX, PF Nature, and Nodinary, which are major domestic indie brand companies.

J2K Bio has secured over 1,000 strains to quickly respond to customer demands. It possesses process know-how to optimize temperature, humidity, and fermentation time to maximize strain functionality. Bio materials provided in the form of exclusive strains are supplied exclusively, making substitution difficult.

The company is jointly developing cosmetic raw materials with major domestic cosmetics brands such as Amorepacific and LG Household & Health Care. Supply is expected to begin in the second half of this year. J2K Bio has established its own skin clinical center and newly secured overseas ODM customers in Europe, Japan, and Southeast Asia.