[Click eStock] "CNC Inter Reflects Future Growth First... Limited Upside Potential"

Investment Rating Adjusted to 'Hold'

Sangsangin Securities evaluated on the 4th that the stock price of C&C International does not have much room to rise. The analysis is that the stock price has reached an overvalued state by reflecting future earnings growth in advance.

C&C International recorded sales of 80.3 billion KRW in the second quarter of this year, achieving sales growth for 10 consecutive quarters. This figure represents a remarkable 40.6% growth compared to the same period last year. Operating profit was 11.8 billion KRW due to special performance bonuses, causing the trend of profitability improvement to somewhat stall.

By region, on a separate basis, domestic sales grew by 94%, and sales in Asia and Europe & Middle East increased by 44% and 58%, respectively. On the other hand, North American sales, centered on the United States, decreased by 14%. Sales from the Shanghai corporation dropped by 51%.

Kim Hyemi, an analyst at Sangsangin Securities, stated, "Sales of lip products (tint, balm formulations), which are the main items with good profit margins, increased significantly, accounting for 75% of lip sales," adding, "In particular, lip products accounted for 79% and 91% of domestic indie brand companies and Europe, respectively."

Analyst Kim forecasted, "As exports of domestic indie brand cosmetics continue to increase, C&C International will maintain its growth trend in the third quarter," and "North American sales, which were somewhat disappointing in the first half, will recover as they produce and supply the previously ordered quantities."

She also noted, "With the production stabilization of the leased factory that started operation in April, productivity has improved since the second quarter," and "From September, the expansion of the second domestic factory will be completed, increasing production volume."

However, she stated, "The current stock price is reflecting future earnings growth in advance due to expansions, reaching a somewhat high level compared to intrinsic value," and "judging that the stock price's upside potential is limited, we adjust the investment opinion from ‘Buy’ to ‘Hold’." The target stock price was set at 100,000 KRW, lower than the current price.