[Edaily Reporter Kim Kyung-eun ] On the 6th, Korea Investment & Securities raised its target price for KOLMAR KOREA(161890)by 15.6% from 160,000 won to 185,000 won, stating that the stock price is expected to resume its upward trend. The firm maintained its “Buy” rating.

Kim Myung-ju, an analyst at Korea Investment & Securities, stated in a report released that day, “The golden age of HANKOOKCOSMETICS has only just begun,” adding, “In hindsight, the recent correction in KOLMAR KOREA’s stock price clearly presents a buying opportunity.”

Korea Investment & Securities projected KOLMAR KOREA’s consolidated revenue for the third quarter of this year to reach 833.9 billion won, a 22.1% increase year-over-year, with operating profit rising 57.7% to 92.0 billion won. It expects operating profit to meet market expectations and estimates the operating profit margin at 11.0%.

The domestic subsidiary is expected to drive earnings growth. Third-quarter revenue for the domestic subsidiary is projected to reach 434.1 billion won, up 34.8% year-over-year and 0.8% quarter-over-quarter. Operating profit is forecast to rise 50.4% to 66.6 billion won, with an operating profit margin of 15.3%.

In contrast, the Chinese subsidiary is projected to see revenue decline by 10.0% year-over-year and post an operating loss of 1.8 billion won. Yeonwoo, which successfully returned to profitability in the second quarter, is expected to continue its profitable trend in the third quarter with an operating profit of 900 million won. The U.S. subsidiary is forecast to post an operating loss of 1.1 billion won.

The recent slump in the stock price was analyzed as a process of adjusting elevated expectations rather than a deterioration in earnings. KOLMAR KOREA’s stock price has fallen 11.9% over the past month, significantly underperforming the KOSPI’s 6.7% gain during the same period.

Analyst Kim explained, “As the HANKOOKCOSMETICS industry entered a boom period faster than the market had anticipated in July and August, investors’ expectations for KOLMAR KOREA’s earnings also rose rapidly,” adding, “We estimate that investors’ actual expectations were higher than the Bloomberg consensus.”

He continued, “While it is clear that the company’s earnings will improve as the industry enters a boom period, the pace of that improvement cannot always match investors’ expectations,” adding, “Since market conditions remain consistently favorable, this adjustment in expectations is healthy.”

The Sejong plant, scheduled to begin operations in July of next year, was also cited as a future growth driver. KOLMAR KOREA plans to significantly expand its production capacity beyond current levels through the operation of the Sejong plant.