[Edaily Reporter kyoungeun kim ] NH INVESTMENT & SECURITIES announced that it is maintaining its “Buy” rating on COSMAX, INC.(192820), which posted strong second-quarter earnings, and raising its target price to 300,000 won. The firm’s analysis indicates that expectations for third-quarter earnings remain valid as strong growth continues at the company’s Chinese and U.S. subsidiaries.
Jeong Ji-yoon, an analyst at NH INVESTMENT & SECURITIES, stated in a report released today, “The company set a new record for its highest-ever consolidated earnings in the second quarter.” She added, “High export growth rates have continued through July and August, and factors that previously exerted downward pressure on margins at the company’s standalone entity have eased. Expectations for third-quarter earnings remain valid due to the strong growth of its Chinese and U.S. subsidiaries.”
He continued, “Due to upward revisions to our estimates for standalone revenue and gross profit margin, we maintain our ‘Buy’ rating and raise the target price from 260,000 won to 300,000 won.”
COSMAX, INC.’s second-quarter consolidated revenue was 794.9 billion won, and operating profit was 73.7 billion won, representing year-over-year increases of 27% and 21%, respectively. The company exceeded the consensus operating profit estimate by 6% and posted its best-ever results.
Revenue for the South Korean subsidiary was 518.4 billion won, and operating profit was 56.4 billion won, representing year-over-year increases of 23% and 13%, respectively. Excluding the reversal of bad debt provisions, operating profit rose by 23%. Driven by improved production efficiency for gel masks and a recovery in sales of color cosmetics brands, the company achieved a standalone operating profit margin of 10.9%, signaling a recovery in margins.
Revenue in China reached 197.4 billion won (+33%); in Shanghai, profitability improved due to increased orders from color cosmetics clients, while in Guangzhou, margins declined due to higher commissions. Revenue in the U.S. reached 53.8 billion won (+79%), and the company is estimated to have posted an operating profit of 2 billion won, achieving its first-ever profit thanks to diversification of its client base.
With HANKOOKCOSMETICS exports hitting a record high in July, COSMAX, INC. has provided guidance for high growth (+35–40%) at its standalone subsidiaries in the third quarter. Sales in the U.S. (+40%) and China (+20%) are also expected to continue double-digit growth, and the profit structure of its overseas subsidiaries is projected to enter a stabilization phase.
Analyst Jeong stated, “Given its attractive valuation, we recommend buying the stock.”