[Click eStock] "Pumtech Korea, the Unrivaled Leader in Packaging... Target Price Raised"

On August 26, Hanwha Investment & Securities raised its target price for Pumtech Korea by 8% to 80,000 won, stating that the company is further solidifying its position in the cosmetics packaging industry.

Recently, global private equity fund KKR acquired a 100% stake in Samhwa, the third-largest cosmetics packaging company in Korea, for approximately 800 billion won. This reflects a trend in which the enterprise value of packaging companies is being evaluated higher than that of brand companies. As of 2024, Samhwa's EV/EBITDA is 19 times, and based on this year's forecast, 12 times-both higher than those of recently traded unlisted brand companies. Last year, Samhwa recorded sales of 186.8 billion won, operating profit of 31.4 billion won, and net profit of 29.6 billion won.

Yoojeong Han, a researcher at Hanwha Investment & Securities, analyzed, "Traditionally, packaging has been positioned at the very end of the cosmetics supply chain, making it subordinate to brand companies and lacking bargaining power. However, as Korean products with differentiated packaging have achieved strong results both domestically and internationally, global brand companies are increasingly recognizing packaging as a key differentiator."

She added, "Cosmetics packaging companies are being reevaluated as strategic partners with semi-monopolistic technological capabilities, rather than simply as downstream OEMs. The shortening of product and brand trend cycles is also making it difficult for brand companies to internalize packaging production lines as they did in the past, which increases their dependence on packaging companies."

She further predicted, "With the gap between the second- and third-largest companies already widening significantly, the change in the largest shareholder of the third-largest company is expected to alter the competitive landscape within the industry, which is likely to have a positive impact on Pumtech Korea."

Currently, Pumtech Korea's order volume continues to grow steadily, and the contribution from high-value-added new products, which are attracting attention from brand companies, is also expanding. The proactive expansion of the fourth plant, which began in the second half of last year, is scheduled for completion in October, with the relocation of injection molding and post-processing lines. The sixth plant is targeted for completion in the second quarter of 2026. However, there are concerns that the expansion effect may be limited between the completion of the fourth and sixth plants.

Nevertheless, she emphasized, "Considering the replacement and efficiency improvements of existing plant lines, as well as the ramp-up of the tube expansion building completed in January, production facilities are expected to expand steadily on a half-yearly basis."