Daol Investment Securities announced on August 31 that it has raised its target price for Kolmar Korea from 170,000 won to 190,000 won, an increase of 11.8%. The firm maintained its 'buy' rating.
Park Jong-hyun, a researcher at Daol Investment Securities, stated, "The increase in sales of sun care and basic products is leading to improved productivity among existing staff and greater efficiency in selling and administrative expenses. As a result, the operational leverage from productivity improvements and the long-term profitability path through the new Sejong plant will highlight Kolmar Korea's relative advantages."
Park analyzed that the profitability differences among cosmetics original design manufacturers (ODM) depend on how efficiently they absorb increased production volumes. In the ODM structure, which has a high proportion of raw material costs, improving margins relies more on the efficiency of selling and administrative expenses and manufacturing labor costs than on depreciation.
Kolmar Korea is expected to see significant productivity improvements as both cost of goods sold and selling expenses are improving, while the burden of fees from the holding company is not increasing significantly. The high level of automation at the new Sejong plant is also seen as a key factor for long-term productivity improvements.
Kolmar Korea's standalone operating profit margin is projected to reach 14.8% in 2026, marking six consecutive years of improvement since 2020's 8.3%. Daol Investment Securities has revised its estimates for the third quarter, projecting consolidated sales of 865.5 billion won and operating profit of 92.2 billion won, with a standalone operating profit margin forecasted at 15.4%.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.