Stock Price Up 59% This Month
Cosmetic Brands Boost Performance with Increased Adoption of Glass Containers
SMCG, which entered the KOSDAQ market last month through a merger with Kiwoom No.7 SPAC, has seen its stock price rise continuously. This is thanks to the increased demand for glass containers as Korean cosmetics gain popularity overseas. The Yeouido securities market expects SMCG's sales to grow year by year.
According to the financial investment industry on the 18th, SMCG's stock price has risen 58.9% since the beginning of this month. Considering that the KOSDAQ index rose 5.8% during the same period, the market-relative return is 53.1 percentage points. Individual investors led the stock price increase by accumulating net purchases of 2.1 billion KRW from the 1st to the 17th. The average purchase price for individual investors is 4,669 KRW, and based on the previous day's closing price of 6,230 KRW, the evaluated return rate is 33.4%.
Established in 1998, SMCG is a manufacturer of glass containers. The electric melting furnace, capable of handling an annual capacity of 50 tons, operates 24 hours a day, 365 days a year. All processes are automated, and the electric melting furnace produces glass containers based on an eco-friendly system. The company has secured over 400 domestic and international cosmetic brands as clients, including L'Or?al and Amorepacific.
With strengthened plastic regulations, more brands in the cosmetics market are adopting glass containers. Seonjae Heo, a researcher at SK Securities, explained, "Countries around the world are increasing mandatory recycling rates for plastics and strengthening regulations related to plastics." He added, "This is leading to a relative increase in the attractiveness of glass containers," emphasizing, "In a situation where there is no cost difference between glass and plastic production, the eco-friendliness, safety, and premium feel of glass containers will be further highlighted."
Recently, various cosmetic brands such as Amorepacific, Vinaw, Manyo Factory, and Dear Dahlia have been actively adopting glass containers. Among SMCG's major clients, Vinaw's color cosmetics brand 'Fwee' is showing explosive growth through products based on glass containers.
SK Securities estimates that SMCG will achieve sales of 72.6 billion KRW and operating profit of 10.2 billion KRW this year. This represents increases of 33% and 130% respectively compared to last year. The reason for the faster profit growth compared to sales is the reduction of fixed cost burdens. Glass container manufacturing requires the melting furnace to operate 24 hours a day. With the full-scale increase in sales, the operating profit margin is also rising.
The increasing proportion of high value-added products is also influencing profit growth. Colored glass containers, which add post-processing steps to transparent glass containers, have an average unit price
of around 800 KRW, three times higher than transparent glass containers. Turnkey orders including post-processing and auxiliary materials are possible, providing both scale expansion and a lock-in effect.
Si-on Kang, a researcher at Korea Investment & Securities, said, "The sales proportion of colored glass containers increased from 37% in 2020 to 65% last year," and predicted, "It will continue to lead external growth and profitability improvement."
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