[Click eStock] "Production Facilities Worldwide... Cosmax's Growth Remains Strong"

Steady Growth Expected in Global Beauty Company Demand

Cosmax is expected to deliver results in line with market expectations for the second quarter of this year. While growth at its subsidiaries in China and Indonesia may slow somewhat, the company is expected to perform well in its Korean subsidiary and in Thailand. Amid tariff risks and a global trend toward supply chain diversification, Cosmax's strategy of establishing production facilities in various countries is seen as a key strength that will continue to drive its growth.

On July 10, Korea Investment & Securities maintained its "Buy" rating on Cosmax and raised its target price by 13.2% to 300,000 won. The previous day's closing price was 261,000 won.

For the second quarter of this year, Cosmax is expected to report consolidated sales of 645.3 billion won and operating profit of 62.1 billion won, representing year-on-year increases of 17.0% and 32.9%, respectively. These figures are in line with market consensus.

Breaking it down further, the Korean subsidiary is projected to see sales and operating profit grow by 22.7% and 41.3%, respectively, compared to the same period last year. This is attributed to robust exports from domestic brands.

However, the performance of the Chinese subsidiary, which had been expected to recover, is seen as somewhat disappointing. Due to underperformance at the Guangzhou subsidiary, total sales growth in China is expected to reach only 5.2% year-on-year. The Indonesian subsidiary, which had shown solid growth until the first quarter of this year, is expected to post a slight decline in sales this quarter. This is attributed to some sales that were expected to be recognized in the second quarter being booked in the first quarter, as well as sales being recognized in other subsidiaries due to joint operations. On the other hand, the Thai subsidiary is expected to achieve 144% year-on-year growth in the second quarter, following similar strong growth in the first quarter.

Cosmax's long-term growth momentum is considered to remain intact. As of the first quarter of this year, direct exports accounted for 15.9% of total sales. Kim Myungjoo, a researcher at Korea Investment & Securities, explained, "Due to the tariff risks triggered by President Donald Trump, global beauty companies such as Est?e Lauder and L'Or?al are increasingly seeking to diversify their supply chains. To respond quickly to market changes, they are expected to actively expand outsourcing for mid- and low-priced mass products," adding, "This is a positive trend for Cosmax, which has production facilities not only in Korea but also in China, Indonesia, and Thailand."