[Click eStock] NH Lowers Kolmar Korea Target Price to 90,000 Won...Maintains 'Buy' Rating

On January 9, NH Investment & Securities lowered its target price for Kolmar Korea to 90,000 won.

Jung Ji-yoon, an analyst at NH Investment & Securities, explained in a report released that day that the downward revision was due to a slight reduction in estimated operating profit from the company's main business, stemming from weak performance at its U.S. subsidiary. The newly suggested target price of 90,000 won is 5% lower than the previous target.

However, the analyst maintained a "Buy" investment opinion. Jung stated, "The downward revision of the company's overall earnings has now come to an end as of the fourth quarter. As of January, sales from the standalone entity are recovering, continuing to show double-digit growth. Investor sentiment is expected to improve as the first half progresses."

Kolmar Korea's consolidated sales for the fourth quarter are estimated at 647.8 billion won, with operating profit at 47.3 billion won. These figures represent increases of 10% and 35%, respectively, compared to the previous year, and are in line with market consensus.

Regarding domestic performance, Jung explained, "Standalone sales growth is subdued due to 10 billion won in advance shipments from the previous quarter and adjustments to global multinational company production lines. However, profitability is expected to improve somewhat due to a focus on skincare-oriented clients."

For overseas performance, sales in the United States are projected to decrease by 60% year-on-year to 8 billion won, with operating profit turning to a loss. Jung pointed out, "Similar to the previous quarter, the main customer at Plant 1 has reduced orders, and the inflow of new clients remains sluggish, so the burden of fixed costs continues." In Canada, sales are expected to reach 8.6 billion won with an operating loss of 1.3 billion won. While sales are projected to decrease by 1%, the operating loss is expected to narrow.