[Click eStock] "Silicon2, Stock Price Adjustment is a Buying Opportunity... Target Price Maintained"

Stock Price Adjustment Despite Strong Q2 Performance
Robust Export of Korean Cosmetics to the US
Strengthening Presence in Non-US Markets

On the 11th, Korea Investment & Securities maintained a 'Buy' rating and a target price of 60,000 KRW for Silicon2. They evaluated the stock price adjustment that occurred despite strong second-quarter earnings as a buying opportunity.

Myungjoo Kim, a researcher at Korea Investment & Securities, said, "Silicon2 recorded solid results in the second quarter, yet a stock price adjustment occurred," adding, "The cause of the price decline was not due to company-specific issues but rather a lack of events in August that could reverse the sector sentiment." This led to profit-taking needs, and the second-quarter earnings of cosmetics companies failing to meet the market's high expectations also had an impact. In particular, the earnings of U.S. beauty companies (e.l.f. Beauty, Ulta Beauty) acted as a factor that dampened investor sentiment.

Researcher Kim stated, "Nevertheless, the popularity of Korean cosmetics in the U.S. continues to rise," and "Exports of Korean cosmetics to the U.S. in August reached an all-time high, and Silicon2's U.S. sales in the third quarter are expected to increase by 98% year-over-year." Although the proportion of Korean products in U.S. cosmetics imports decreased in July, it is expected to recover in August.

Silicon2 strengthened its presence in non-U.S. markets by establishing subsidiaries in Singapore and the United Kingdom in June. Currently, the shares of exports to Singapore and the United Kingdom in Korean cosmetics exports are each around 2%, but the export amounts are steadily increasing. Notably, the United Arab Emirates (UAE) stands out among countries in Silicon2's sales this year; it was not among the top nine countries by sales last year but has started to increase its share since the first quarter of this year.

Researcher Kim said, "The current stock price has fallen 21% from its peak due to a lack of events in August and macroeconomic uncertainties," adding, "Although macroeconomic uncertainties still exist, considering the upcoming consumer events around Chuseok (October Prime Day, November Black Friday) and strong performance in non-U.S. regions in the second half of the year, it is time to use the stock price adjustment as a buying opportunity."