[Stock in Focus] Cosmax Falls on Widening Losses at U.S. Subsidiary

As of 9:50 a.m. on August 12, Cosmax shares were trading at 213,000 won on the Korea Exchange, down 9.94% from the previous day's closing price. This appears to be due to securities firms releasing reports lowering their target prices following the company's second-quarter earnings announcement the previous day.

The previous day, Cosmax announced that, on a consolidated basis, it posted sales of 623.6 billion won and operating profit of 60.8 billion won for the second quarter. These figures represent increases of 13% and 30%, respectively, compared to the same period last year.

However, performance varied by region. By subsidiary, sales growth rates were as follows: Southeast Asia +23%, Korea +21%, China +1%, and the United States -17%. In Southeast Asia, net profit was 4.6 billion won, maintaining the trend from the previous quarter. In contrast, the United States posted a net loss of 20.4 billion won, with the deficit widening compared to the net loss of 9.6 billion won in the second quarter of last year.

On this day, Shinhan Investment & Securities lowered its target price for Cosmax from 320,000 won to 300,000 won, stating that the widening deficit in the United States was due to delays in sales from new customers as well as delays in orders from existing customers. Mirae Asset Securities also revised its target price downward from 310,000 won to 290,000 won. However, regarding the U.S. market, the firm analyzed that order volumes from major clients overall appear to be returning to a growth trend.

Daol Investment & Securities also lowered its target price for Cosmax from 310,000 won to 280,000 won.