[Click eStock] "CTK, North America Local Factory-Owned Skincare Company in Focus"

Hana Securities analyzed on the 13th that CTK will attract attention as a sun care company with a local production factory in North America amid strengthened cosmetic regulations in the U.S. under MoCRA (Modernization of Cosmetics Regulation Act).

CTK is a platform company that exports cosmetics through OEM/ODM methods targeting global beauty brands. Established in 2001, the company has been providing all beauty-related services at once?from global trend research to product planning, formula and package R&D, design, and logistics?through its beauty creation platform CTK CLIP since June 2022.

The main clients consist of global brands such as L'Or?al, Unilever, and Est?e Lauder, whose product life cycles exceed 3 to 5 years, securing stable reorder sales (accounting for more than 70%). In particular, by offering a MOQ (Minimum Order Quantity) service of 1,000 units, CTK CLIP is lowering market entry barriers for indie brands and enhancing its status.

In December 2022, CTK invested approximately KRW 27.9 billion to acquire 100% equity in an OTC (Over the Counter) factory on the U.S. West Coast. OTC refers to general medicines available without a prescription, including sun care and acne care products.

Jaeho Choi, a researcher at Hana Securities, stated, “With the enforcement of MoCRA from 2023, cosmetic regulations in the U.S. are being strengthened, so CTK, which owns a local OTC factory, is expected to benefit.” He added, “Especially, due to FDA regulations, sunscreen products among cosmetics exported from Korea to the U.S. have the highest import rejection rate (57%), highlighting the competitiveness of local production factories.”

CTK aims for KRW 117.3 billion in sales and KRW 12.4 billion in operating profit by 2025, representing increases of 36% and 2,864%, respectively, compared to the previous year. Although the company experienced poor performance in the past due to FDA approval failures and customer dependency issues, it is analyzed to have overcome these challenges through OTC product production at FDA-certified factories and diversification of clients.

Researcher Choi analyzed, “As of Q3 this year, the dependency on a specific client has been reduced to 12.6%, and a stable operating profit margin (OPM) in the low to mid-10% range is expected.” He also noted, “Additional growth is anticipated in OTC product production and biodegradable plastic businesses.”