[Click eStock] "SMCG, Increasing Demand for Glass Containers in Cosmetics"

On May 16, SK Securities stated that SMCG is expected to continue benefiting from operating leverage effects due to increasing demand for glass containers in the cosmetics industry.

Heo Sunjae, a researcher at SK Securities, explained, "The global glass container market in the cosmetics industry will continue its structural growth trend," adding, "It will be influenced by the strengthening of plastic regulations both domestically and internationally, as well as the expansion of eco-friendly branding."

He further noted, "With intensifying competition in K-beauty and the premiumization trend, the relative attractiveness of glass containers is increasing."

Heo also stated, "SMCG attended the 'LUXE PACK New York' packaging exhibition held in the United States from May 7 to 8," and analyzed, "During the event, many global cosmetics companies were considering shifting their glass container production from China to Korea due to the burden of tariffs on Chinese imports."

He explained, "Glass container manufacturing is a typical capital-intensive industry where operating leverage is significant because the furnaces used to melt glass must operate 24 hours a day. As of last year, SMCG's fixed cost ratio was about 80%." He emphasized, "A meaningful increase in operating margin is expected to accompany a full-scale rise in sales, and the company is likely to maintain a high-profit business structure for a long period, especially as major competitors are experiencing business downturns."