[Edaily Reporter Shin Ha-yeon ] On the 1st, NH INVESTMENT & SECURITIES projected that SILICON 2 Co.,Ltd.(257720)would post record-high second-quarter earnings, driven by robust global demand, particularly in Europe and North America. However, reflecting the inevitability of margin pressure during the process of expanding customer bases by country and diversifying the brands it handles, the firm lowered its target price from 60,000 won to 48,000 won. It maintained its “Buy” investment rating.

Jeong Ji-yoon, an analyst at NH INVESTMENT & SECURITIES, stated, “Second-quarter earnings are expected to meet consensus estimates,” adding, “A surge in European sales, renewed growth in North America, and a recovery in the Asian and Middle Eastern markets are expected to converge, leading to record-high earnings.” He further assessed, “Considering its market capitalization and earnings within the KOSDAQ cosmetics sector, it is clearly a standout stock.”

SILICON 2 Co.,Ltd.’s second-quarter consolidated revenue is projected to reach 379.5 billion won, a 43% increase year-over-year, while operating profit is expected to rise 36% to 71.0 billion won. European sales are forecast to increase by 67% to 179.0 billion won, and North American sales are expected to grow by 45% to 71.0 billion won. Asia (50.8 billion won), the Middle East (31.5 billion won), South America (18.2 billion won), and Russia/CIS (18.4 billion won) are also expected to continue their double-digit growth trends.

In Europe, the expansion of partnerships with retailers such as Boots, Lookfantastic, and Superdrug is expected to drive performance, while in North America, the benefits of diversifying retailers through collaboration with Olive Young USA are expected to take full effect. The Middle East and Asia are showing signs of recovery compared to the previous quarter, and growth in South America is also projected to accelerate in the second half of the year, driven by the expansion of the Mexican subsidiary’s sales network.

Particular attention was drawn to the fact that SILICON 2 Co.,Ltd.’s growth drivers are expanding beyond K-Beauty to encompass the broader lifestyle sector. Analyst Jeong noted, “Beyond the hair and body categories, the company has recently launched innerwear brands that are in high demand among foreign consumers, demonstrating its ability to engage in trendy and flexible product planning rather than merely acting as a distributor.”

He continued, “SILICON 2 Co.,Ltd. is attempting to diversify its product categories by launching an innerwear brand in late June,” adding, “We expect the company to further advance its overseas expansion across the entire spectrum of Korean lifestyle—from existing skincare products to hair care, body care, health supplements, and innerwear.”

However, the target stock price was lowered. Regarding this, Analyst Jeong noted, “Margin bottlenecks are inevitable during the process of diversifying trading partners by country and expanding the portfolio of acquired brands,” but added, “The company is currently demonstrating high revenue growth in line with the growth trajectory of K-Beauty exports, and if KOSDAQ market conditions recover, the stock’s resilience within the sector is expected to be strong.”