[Edaily Reporter Kim Kyung-eun ] On the 11th, Daol Investment & Securities raised its target price for COSMECCA KOREA CO.,LTD.(241710)from 120,000 won to 130,000 won, citing continued strong growth at its Korean subsidiary, and revised its earnings estimates upward. The firm maintained its “Buy” rating.

Park Jong-hyun, an analyst at Daol Investment & Securities, stated in a report released that day, “We have raised our estimates to reflect the expansion of the customer base among small and medium-sized enterprises and the upward revision of the annual guidance.”

COSMECCA KOREA CO.,LTD.’s second-quarter revenue this year reached 226.1 billion won, a 39.8% increase year-over-year. Operating profit for the same period rose 39.3% to 32.1 billion won, exceeding market consensus by 16%.

The Korean subsidiary was the primary driver of this earnings growth. Its revenue reached 178.8 billion won, a 63% increase year-over-year, while operating profit rose 77% to 24.5 billion won, exceeding market expectations.

In particular, as strong growth among existing clients continued, the share of skincare products expanded to 95% of total sales. Color cosmetics accounted for approximately 5%. The company explained that the high profitability of skincare products contributed to the improvement in earnings.

The consolidated operating profit margin (OPM) remained at 14.2%, the same level as the same period last year, but improved by 2.4 percentage points compared to the previous quarter. Analysts note that operating leverage was evident even within a production structure characterized by a wide variety of products in small batches.

Revenue at the U.S. subsidiary was 51.9 billion won, down 10% year-over-year but up 4% from the previous quarter. The operating profit margin remained at 16.8%. At Englewood Lab, Inc., operating profit rose 74% year-over-year to 3.7 billion won, driven by increased orders for premium brands and over-the-counter (OTC) sun care products.

Growth is expected to continue in the second half of the year. Daol Investment & Securities projected that COSMECCA KOREA CO.,LTD.’s third-quarter revenue would reach 233.6 billion won, a 28% increase year-over-year. Operating profit is forecast to rise by 23% to 33.5 billion won. Revenue for the Korean and U.S. subsidiaries is projected to reach 177.9 billion won and 63.6 billion won, respectively, representing year-over-year increases of 37% and 3%.

Analyst Park explained, “The company incorporated the earnings growth of K-Indie brands into its results and achieved an operating profit margin in the 14% range despite product diversification,” adding, “The growth rate at the Korean subsidiary significantly exceeded market expectations.”