[Click eStock] "Kolmar BNH, H2 Performance Expectations, Target Price Maintained at 37,000"

Expecting Full Recovery in Second Half Performance
Health Functional Food Sales Rebound
Overseas Market Growth Also Anticipated

Hana Securities analyzed on the 21st that Kolmar BNH's performance improvement will begin in earnest from the second half of the year. The investment opinion 'Buy' and the target price of 37,000 KRW were maintained. Kolmar BNH's closing price on the previous trading day was 15,620 KRW.

Sim Eun-joo, a researcher at Hana Securities, said, "The consolidated sales and operating profit for 2024 are expected to be 661.8 billion KRW (a 14.2% increase from the previous year) and 40.8 billion KRW (a 35.0% increase from the previous year), respectively," adding, "The performance, which sharply declined from 109.2 billion KRW in 2020 to 30.3 billion KRW in 2023, is expected to recover starting this year."

The first factor for the performance recovery is the revival of Atomy's business activities in China after the end of COVID-19, leading to a recovery in sales of health functional foods. The renewal of cosmetic products is also underway. Secondly, domestic cost burdens are expected to ease. The rising trend of major raw material prices has begun to slow down, and the increased operating rate of the Sejong 3 plant is expected to offset the increase in fixed costs. Thirdly, an improvement in the performance of Gangso Kolmar is also anticipated. In 2023, Gangso Kolmar recorded sales of 23.3 billion KRW and an operating loss, but this year, sales are expected to increase by 91% year-on-year to 44.5 billion KRW. Operating profit is also expected to reach the break-even point (BEP).

The consolidated sales and operating profit for the second quarter are estimated at 165.2 billion KRW (a 5.4% increase year-on-year) and 9.1 billion KRW (an 8.6% decrease year-on-year), respectively. Full-scale operation of the Sejong 3 plant is expected from the second half of the year, and fixed cost burdens are expected to continue until the first half. However, overseas sales are expected to continue growing due to demand recovery in Southeast Asia and Gangso Kolmar securing local customers.

Researcher Sim said, "Performance recovery is expected to accelerate from the second half of the year," and "Quarterly operating profits are expected to be 9.5 billion KRW in Q1, 9.1 billion KRW in Q2, 10.6 billion KRW in Q3, and 11.7 billion KRW in Q4." In the second half, fixed cost reductions due to increased operating rates, recovery of overseas markets?especially growth in China and Southeast Asia?and high growth in Russia are anticipated. The turnaround in performance of consolidated subsidiaries Kolmask and Gangso Kolmar is also expected to positively impact consolidated earnings.