Domestic Cosmetics Sold Overseas... StyleKorean.com Growth
Domestic Cosmetics Popular in the US and Southeast Asia
Silicon2, which achieved results exceeding market expectations in the first quarter of this year, was selected as the top stock in terms of stock price increase this year. This is thanks to Silicon2's rapid growth as the popularity of Korean cosmetics rises overseas. The Yeouido securities market expects Silicon2 to continue its performance improvement trend from the second quarter of this year onward.
According to the financial investment industry on the 28th, Silicon2 has risen 372% since the beginning of this year. Its market capitalization jumped to 2.2 trillion KRW. It recorded the highest stock price increase rate this year, surpassing Jungang Advanced Materials (333.5%), Samhwa Electric (327.7%), and Enchem (290.6%).
Silicon2 is an e-commerce platform company that sells Korean cosmetic brands directly to consumers in about 160 countries worldwide through the online mall 'StyleKorean.com.' It provides advanced logistics services based on an automated guided vehicle (AGV) system, utilizing overseas branches for localization business and being the first domestic distributor to implement this automated logistics robot system.
Recently, Korean cosmetics have gained popularity overseas. With well-established ODM (Original Design Manufacturer) and OEM (Original Equipment Manufacturer) systems, various emerging brands are flooding the market. As the influence of Hallyu content strengthens and online transactions become more active, demand for Korean cosmetics is increasing worldwide.
In the first quarter of this year, Silicon2 recorded consolidated sales of 149.9 billion KRW and operating profit of 29.4 billion KRW. These figures represent increases of 158% and 297%, respectively, compared to the same period last year.
These results significantly exceeded market expectations of 110 billion KRW in sales and 13 billion KRW in operating profit. Hyunjin Park, a researcher at Shinhan Investment Corp., explained, "Strong performance was achieved as export volumes of indie cosmetic brands increased," adding, "The reason profitability improved more than the sales growth rate is that the company has a negotiating advantage when purchasing products."
Looking at sales trends by country, sales in the United States increased by 128% year-on-year, and the Netherlands saw a 451% increase. Korean cosmetics are highly popular not only in the U.S. but also in Southeast Asia. In the Indonesian imported cosmetics market, the share of imports from Korea reaches 25.8%. Among cosmetic brands, sales of 'Joseon Beauty,' 'COSRX,' and 'Mixsoon' have increased significantly. Korean cosmetic brands are advancing regardless of the type of functional cosmetics.
Myungjoo Kim, a researcher at Korea Investment & Securities, said, "Thanks to the strong popularity of Korean culture and the product competitiveness of Korean cosmetics, the awareness of Korean cosmetics in the U.S. is steadily increasing," adding, "Since the COVID-19 pandemic, Amazon has begun to stand out in the U.S. cosmetics market, which is a positive change for Korean cosmetics known for their cost-effectiveness."
Silicon2 has the advantage of high performance stability because it sells various brands in various countries. Amid ongoing inflation concerns, it is expected that cost-effective Korean cosmetic brands will continue to gain popularity, drawing attention to Silicon2. However, it is necessary to keep in mind that the recent rapid rise in stock price has surpassed the target prices suggested by the securities industry. Korea Investment & Securities raised Silicon2's target price to 27,000 KRW on the 10th after confirming the first-quarter results. Although this was a 74.2% increase from the previous target price of 15,000 KRW, the stock price rose even faster.
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