DB Securities announced on August 12 that it has raised its target price for Cosmax from 240,000 won to 320,000 won, an increase of 33.3%, citing the expansion of domestic and international orders and improved profitability as key factors for anticipated growth in the second half of the year. The firm maintained its 'buy' rating.
Heo Je-na, a researcher at DB Securities, stated, "With the growth of K-beauty, orders for our company, a leading manufacturer in market share, are rapidly increasing. We expect significant growth in both domestic and overseas operations in the second half of the year, driven by substantial revenue growth."
Cosmax reported a consolidated operating profit of 73.7 billion won for the second quarter, a 21.2% increase compared to the same period last year, slightly exceeding market expectations of 70 billion won. Domestic sales rose by 23%, supported by strong demand for skincare products and improved productivity in gel mask production, contributing to enhanced profitability.
International operations also continued to show growth. Sales in China increased by 30%, with the Shanghai subsidiary experiencing significant growth due to strengthened collaboration with clients. The Indonesian subsidiary saw a 38% rise in sales as existing clients recovered, while the Thai subsidiary grew by 8%.
Looking ahead, the domestic subsidiary is expected to see a recovery in profitability. The burden from last year's high dependency on sales from color cosmetics clients is easing, and improvements in the yield of hydrogel masks, along with a rapid increase in orders for eye patches, are contributing factors.
The growth of the U.S. subsidiary is also viewed positively. Orders remain strong, particularly from major clients, and new orders are expanding across product lines, including color cosmetics and over-the-counter (OTC) products, suggesting continued quarterly performance improvements in the second half of the year. DB Securities forecasts that the domestic subsidiary's sales growth rate will exceed 30% in the third quarter.
* This article has been translated by AI.
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