[Edaily Reporter Kim Hyung-il ] Korea Investment & Securities projected that SILICON 2 Co.,Ltd.(257720)will continue to post solid earnings in the second half of the year as it diversifies its client base. The firm maintained its “Buy” rating and raised its target price from 60,000 won to 65,000 won.

On the 4th, Kim Myung-ju, an analyst at Korea Investment & Securities, noted that the U.S. accounted for 19.2% of SILICON 2 Co.,Ltd.’s total second-quarter revenue, a 2.6 percentage point increase from the previous quarter. The gross profit margin (GPM) for the second quarter improved by 2 percentage points compared to the previous quarter. Analyst Kim estimated that more than 1 percentage point of this improvement was due to the strong U.S. dollar and the increased share of U.S. sales, while diversification of the customer base and a reduction in discount rates contributed approximately 0.5 percentage points.

Given that the won-dollar exchange rate has fallen 12.9% from its previous high, he forecast that it would be difficult for the third-quarter GPM to exceed the second-quarter level. However, he predicted that the third-quarter GPM could improve compared to the first quarter as retailers’ contribution to sales increases, similar to the trend seen in 2023–2024.

Analyst Kim cited the high proportion of wholesale customers as the reason for the 2.6 percentage point decline in GPM in 2025. In contrast, in the second quarter of this year, Boots, a UK national retailer, emerged as the company’s largest customer. He noted that the continued popularity of HANKOOKCOSMETICS in the UK is expected to support growth in the second half of the year. He added that while iHerb’s sales were sluggish in the second quarter, they have recently shown signs of recovery.

Analyst Kim noted that HANKOOKCOSMETICS have been expanding into European brick-and-mortar channels since the start of this year. He stated, “While a healthy correction in the cosmetics sector may occur in September, SILICON 2 Co.,Ltd.’s valuation remains attractive,” adding, “SILICON 2 Co.,Ltd. is a relatively safe investment within the cosmetics sector.” In particular, he noted the potential for new clients, especially through distribution channels affiliated with CVC Capital, citing Douglas as a potential client.

He identified rising freight costs and a strengthening won as headwinds. Analyst Kim noted, “Rising freight costs are a headwind,” but added, “However, as freight volumes are expected to decline in the third quarter due to inventory buildup in the second quarter, the ratio of freight costs to third-quarter revenue is likely to remain at a level similar to that of the second quarter.” Finally, he added, “If the won continues to strengthen, it could weigh on earnings.”