Lee Gayoung, a researcher at Samsung Securities, stated, "Second-quarter sales growth is expected to be 22% year-on-year." She added, "Sun care products, which have high profit margins, have grown significantly to account for 9% of total sales. However, mask packs, which have relatively lower margins, also grew substantially, so the operating margin is expected to be around 10.7%."
In the case of the Chinese subsidiaries, Shanghai is showing signs of recovery, while Guangzhou is facing difficulties.
Lee explained, "The recovery in Shanghai is due to a combination of factors: the recovery of sales from existing clients, the influx of new clients following the appointment of a new branch head at the end of last year, and the realization of joint sales volumes with the domestic subsidiary." She continued, "For Guangzhou, both the ODM business and the Itsen JV are expected to see negative growth compared to last year, and Guangzhou's second-quarter sales are expected to decrease by 5% year-on-year."
The Indonesian subsidiary experienced a slight slowdown, while in Thailand, a local client exporting to Western markets placed large-scale sun care orders in the second quarter. As a result, second-quarter sales in Thailand are expected to grow by 105% year-on-year.
In the United States, the decline in sales narrowed thanks to new client orders that came in at the end of last year. However, with an additional 8 billion won in non-operating expenses related to the return of COVID-19 relief funds, a second-quarter operating loss of 13.5 billion won is expected.
Lee commented, "Although there are slight upward or downward revisions in forecasts for each subsidiary, overall, the company is growing without major surprises." She added, "We believe the benefits from the K-beauty boom will continue for the time being."
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