[Click eStock] "Silicontwo Emerges as a European Powerhouse... Target Price Raised"

Rapid Global Expansion Continues
Buy Recommendation Remains Valid

On May 13, Meritz Securities maintained its 'Buy' investment rating on Silicontwo and raised its target price from 42,000 won to 48,000 won, citing heightened expectations for global expansion driven by a significant increase in sales in Europe.

In the first quarter of this year, Silicontwo posted consolidated sales of 245.7 billion won and operating profit of 47.7 billion won, up 64% and 62% respectively from the same period last year, far exceeding market expectations (operating profit of 40.1 billion won). In particular, sales in the United States, which had been sluggish in the fourth quarter of last year, recovered to 45 billion won, easing performance uncertainties. European sales surged to 72.2 billion won, a 361% increase year-on-year, leading the improvement in results. Sales in other regions such as the Middle East (16.3 billion won) and Pakistan (6.3 billion won) also grew significantly.

Researcher Park Jongdae commented, "In Europe, the company is rapidly expanding its reach from Germany, Estonia, and France to Western Europe, Eastern Europe, and Russia." He added, "Unlike the United States, competition in Europe is limited both online and offline, and there are no dominant players, so the growth rate, potential, and visibility are actually greater than in the United States." He also assessed that in the Middle East, the establishment of a local subsidiary and the securing of two logistics centers this year are likely to elevate sales to a new level.

He continued, "K-beauty exports are spreading not only to Western Europe, including France, Spain, and Italy, but also to Central Asia and the Southern Hemisphere," and predicted, "Silicontwo, Korea's largest cosmetics trade vendor, will continue to absorb this global demand for the time being."

Park raised the target price to 48,000 won by applying a 12-month forward price-to-earnings ratio (PER) of 16. He pointed out, "Considering that Silicontwo's compound annual earnings per share (EPS) growth rate from 2024 to 2027 is high at 23%, valuation pressure is low," and added, "The current share price is at a PER of 13.6, so it remains advisable to continue increasing holdings."