[Edaily Reporter Shin Ha-yeon] On the 5th, Hana Securities stated that #Zenic is the company set to benefit most from the growing global demand for hydrogel masks and predicted that its earnings growth will continue into the second quarter.

Park Jong-dae, an analyst at Hana Securities, stated, “Global demand for hydrogel masks is exceeding expectations, as evidenced by export figures,” adding, “Exports of mask packs in the first quarter increased by 59% year-over-year, and second-quarter exports are surpassing 70%.”

He assessed, “Demand for product placement from major global distributors and demand for new product launches from domestic and international brands are both increasing.” He added, “There are only five or six cosmetic ODM companies in Korea capable of properly manufacturing hydrogel masks, and Zenic is the company that can produce the most while maintaining the highest profitability.”

Zenic recorded consolidated revenue of 29.4 billion won in the first quarter of this year, achieving its highest-ever quarterly revenue. This represents a 65% increase compared to the same period last year.

However, profitability fell short of market expectations. Analyst Park explained, “There was a significant amount of overtime due to the flood of orders, and since the yield rate for Company H’s new product launch did not improve initially, the cost ratio rose to 81%,” noting, “This is a very high level compared to the previous year’s average cost ratio of 71%.”

Analysts predict that profitability will return to normal starting in the second quarter. Analyst Park said, “Yield rates have stabilized significantly in the second quarter, and the labor cost burden has eased as the number of production lines increased from eight in the first quarter to 11 in the second quarter.”

He continued, “We forecast second-quarter revenue to reach 39.6 billion won, a 61% increase year-over-year, with operating profit at 7.6 billion won,” noting, “It is understood that revenue through May has already surpassed the total for the entire first quarter.”

The growth trend is expected to continue into next year. Hana Securities estimates that Zenic’s annual revenue will increase from 78.2 billion won this year to 134.5 billion won in 2026 and 184.1 billion won in 2027. Operating profit is projected to reach 15 billion won this year, 24.2 billion won next year, and 38.7 billion won in 2027.

Analyst Park stated, "The current stock price is at a 12-month forward price-to-earnings (P/E) ratio of 7.1 times," adding, "Considering the rapid expansion of global demand, the high technological barriers to entry as a specialized hydrogel ODM company, and its superior profit structure compared to competitors, the stock is significantly undervalued."