[Click eStock] "Permtek Korea, Benefiting from K-Beauty Trends Centered on Indie Brands"

"Indie Brands Need Differentiated Cosmetic Containers"

On the 20th, KB Securities initiated coverage on Permtek Korea, a specialized manufacturer of cosmetic containers, with a buy rating and a target price of 61,000 KRW, stating that "benefits from the K-Beauty export trend centered on indie brands are expected."

On the same day, Hyun-dong Sung, a researcher at KB Securities, said, "The target price was calculated by applying a price-to-earnings ratio (PER) of 19.5 times to this year's expected earnings per share (EPS) of 3,119 KRW."

Permtek Korea's annual performance last year showed sales of 337.5 billion KRW and operating profit of 48.4 billion KRW, increasing by 18.6% and 37.1% respectively compared to the previous year. The pump division recorded 253.6 billion KRW (19.3%) and the tube division 78.1 billion KRW (20.6%), showing high growth and offsetting the sluggish dry division.

Researcher Sung emphasized, "This year's performance is expected to be consolidated sales of 378.6 billion KRW and operating profit of 56.7 billion KRW," adding, "A favorable order flow has continued since the beginning of the year, and the completion and operation of the 4th factory are scheduled for July to August."

Regarding investment points, Researcher Sung noted, "Permtek Korea is benefiting from the trend changes in the K-Beauty industry," explaining, "In the past, K-Beauty grew mainly through exports to China by large cosmetic companies, but since the 2020s, the influence of social networking services (SNS) and video platforms has expanded, leading to the emergence of various indie brands. Export countries are also diversifying."

He added, "Cosmetic containers are not only accessories for cosmetics but also mediators that simultaneously convey product quality and brand image," and "Indie brands rely on outsourcing production and distribution, which leads to benefits for Permtek Korea, capable of providing unique and differentiated container solutions."

Having a diverse product and customer portfolio is also a strength. As of last year, the sales composition by product was diversified with pumps and containers at 41%, tubes at 23%, compacts at 16%, and sticks at 14%. By end-industry, the composition was cosmetics 91%, daily necessities 4%, pharmaceuticals 2%, and health functional foods 2%.

Researcher Sung emphasized, "Permtek Korea owns over 5,000 free molds," adding, "Since the intellectual property rights (IP) of containers produced with self-made molds belong to Permtek Korea, they can be sold to various clients."