[Edaily Reporter Kim Kyung-eun ] On the 12th, Hana Securities raised its target price for COSMAX, INC.(192820)by 27.1% from 240,000 won to 305,000 won, citing expectations for valuation normalization in the second half of the year. The firm maintained its “Buy” rating.

Park Jong-dae, an analyst at Hana Securities, stated, “The second-quarter earnings resolved various uncertainties through improved domestic profitability, a return to operating profit in the U.S. business, and a turnaround in Southeast Asian performance, and the factors contributing to the valuation discount have disappeared.”

COSMAX, INC. reported second-quarter consolidated revenue that rose 28% year-over-year to 794.9 billion won, while operating profit increased 21% to 73.7 billion won. Operating profit exceeded market expectations of 69.6 billion won.

By region, revenue at the domestic headquarters rose 23% year-over-year, while revenue at the Chinese and U.S. subsidiaries grew by 33% and 79%, respectively. Revenue at the Southeast Asian subsidiary also increased by 22%, marking a turnaround in performance.

Notably, the domestic headquarters surpassed 500 billion won in revenue for the first time on a quarterly basis. Analysts note that profitability is improving alongside revenue growth. As the operating leverage effect in the basic skincare segment took full effect, the rapid growth of eye patch products contributed to improved profitability. Analysts suggest this offset the burden of gel masks, which had been a factor in last year’s decline in profitability.

The U.S. subsidiary is estimated to have returned to profitability, recording an operating profit margin (OPM) of approximately 4%. Analyst Park commented, “The U.S. business is positive in that top-tier clients account for 60% of sales—a limited proportion—and growth is driven primarily by reorders.”

The company is expected to see an even greater increase in profits in the second half of the year. Driven by a low base from last year, high domestic sales growth, and a turnaround in the performance of overseas subsidiaries, COSMAX, INC.’s operating profit for the second half is projected to increase by 70% year-over-year.

COSMAX, INC.’s third-quarter revenue growth guidance by region is 35–40% for South Korea, 20% for China, 40% for the U.S., and 30% each for Indonesia and Thailand. In particular, the domestic business is expected to significantly outperform the 20% growth rate recorded in the first half of the year.

Strong growth in skincare products and the successful establishment of suncare products are also expected to support earnings growth. Additionally, analysts note that color cosmetics could become a new growth driver if new products targeting global multinational corporations (MNCs) begin to deliver substantial results.

Analyst Park emphasized, “With the strongest export momentum in the history of HANKOOKCOSMETICS continuing, COSMAX, INC., as the world’s leading cosmetics ODM (Original Design Manufacturer), is set to benefit significantly,” adding, “It is a good time to buy at current levels.”

The target price was calculated using a 12-month forward price-to-earnings ratio (P/E ratio) of 15x. The current stock price is trading at a 12-month forward P/E ratio of 11x.