[Click e-Stock] "Tony Moly Surges on Strong Earnings... Growth Driven by Megacos, New Channels, and Emerging Markets"

On June 23, Yuanta Securities projected that Tony Moly would continue its strong performance into the second quarter of this year.

Lee Seungeun, a researcher at Yuanta Securities, highlighted "growth driven by Megacos, new channels, and emerging markets," emphasizing both Tony Moly's business expansion and improvement in profitability. For the second quarter on a consolidated basis, sales are expected to reach 62.9 billion KRW, up 34% year-on-year, and operating profit is forecast at 6 billion KRW, up 12% year-on-year, exceeding the market consensus of 5.6 billion KRW.

The subsidiary Megacos is expected to record second-quarter sales of 30 billion KRW (an increase of 89% year-on-year) and operating profit of 2.1 billion KRW (an increase of 36% year-on-year). Lee analyzed, "In addition to existing clients, new orders are expanding, diversifying the sales base, and for some clients, the annual sales proportion for a single brand is expected to expand to around 20%." In particular, the expansion of the mask pack packaging line in the first quarter has improved production efficiency, leading to a clear recovery in profitability.

Additionally, the new channels, which have become a new growth axis for Tony Moly, are expected to post second-quarter sales of 8 billion KRW (an increase of 138% year-on-year). Lee reported, "Recently, limited-edition products, mainly color kits, have sold out rapidly in distribution channels where transaction volumes have increased sharply compared to before, resulting in demand that exceeded expectations."

He added, "Some channels are showing improved brand recognition alongside ongoing promotions, and the operating margin is estimated at around 20%, surpassing the company-wide average of 10%." He assessed that the results reflect the success of a channel strategy focused on profitability.

Encouraging results are also expected in overseas markets. Sales from other regions are estimated at 4 billion KRW (an increase of 33% year-on-year), with India, Mexico, and Southeast Asia expected to drive major growth. Lee Seungeun explained, "India and Mexico are emerging as key countries where growth of more than double year-on-year is expected this year, becoming major bases for the global expansion strategy."

However, concerns have been raised about the burden from the recent sharp short-term rise in the stock price. Over the past week, Tony Moly's share price surged by 34%, driven by expectations of strong performance, hopes for structural improvement, and a shift in funds from large-cap to small- and mid-cap stocks to avoid valuation pressures. However, during the same period, foreigners were net sellers of 3 billion KRW, while institutions were net buyers of only 1.2 billion KRW, indicating that the sharp rise occurred without a clear main buying force.

Lee noted, "The sustainability of the short-term rally may be limited," and pointed out, "The key variables that will determine the achievability of second-half results are the sustainability of Megacos orders, continued growth in new channels, and the expansion of overseas sales."