[Edaily Reporter Shin Ha-yeon ] On the 2nd, Yuanta Securities Korea projected that COSMAX, INC.(192820)’s third-quarter operating profit is highly likely to exceed market expectations due to strong order intake from domestic and international cosmetics original design manufacturer (ODM) clients. Despite the recent stock price correction, earnings forecasts are actually rising, leading the firm to view the current stock price level as an opportunity to increase holdings. It maintained its “Buy” investment rating and target price of 363,000 won.

Lee Seung-eun, an analyst at Yuanta Securities Korea, stated in a report released that day, “We believe the company has entered a phase where strong order intake from South Korea and the U.S. is driving revenue growth, and the expansion of sales at its U.S. subsidiary is translating into profit leverage.”

Yuanta Securities Korea estimates that COSMAX, INC.’s third-quarter consolidated revenue will reach 815 billion won, a 39% increase year-over-year. Operating profit is expected to rise to 83 billion won, up approximately 94% from 42.7 billion won in the same period last year. The operating profit margin is also projected to improve from the 7% range in the prior-year period to around 10%.

Domestic operations are expected to drive earnings growth. Third-quarter revenue for the Korean subsidiary is projected to reach 565 billion won, a 47% increase year-over-year. This growth is attributed to a steady influx of orders for export and overseas channel products, despite a reduction in operating days due to summer vacations and the Chuseok holiday.

In particular, the growth rate of skincare clients has accelerated compared to the first half of the year, and the color cosmetics segment—which had been relatively sluggish—is expected to rebound, driven by new product launches and promotional activities from major clients.

The analyst explained, “The growth rate of skincare clients has accelerated compared to the first half of the year, and the previously sluggish color cosmetics segment is also expected to rebound thanks to new product launches and promotional campaigns by major clients.”

Growth at the U.S. subsidiary is also expected to be notable. Third-quarter revenue for the U.S. subsidiary is estimated at 63 billion won, a 71% increase year-over-year. This is because both indie brands and existing major clients are continuing to place repeat orders and new orders.

With development requests and product adoptions increasing, particularly for skincare items such as creams, serums, masks, and suncare, the company anticipates not only revenue growth but also improved profitability. The analyst stated, “The U.S. subsidiary is expected to post high growth of +71% year-over-year,” adding, “As development requests and adoptions for skincare products rise, we expect operating profit to increase compared to the previous quarter alongside revenue growth.”

Businesses in China and Southeast Asia are also expected to join the recovery trend. The Chinese subsidiary is projected to grow 21% year-over-year on a consolidated basis. The Shanghai subsidiary is estimated to grow 32%, driven by expanded orders from a major color cosmetics client, while the Guangzhou subsidiary is projected to grow 21% due to strong performance in offline and export channels.

In Southeast Asia, the Indonesian subsidiary is projected to grow by 30%, and the Thai subsidiary by 25%. With major overseas subsidiaries—following those in Korea and the U.S.—now growing in tandem, the scope of earnings improvement appears to be expanding.

The recent decline in the stock price is seen as out of step with the earnings outlook. COSMAX, INC.’s stock price rose to a 52-week high of 308,500 won in early October on earnings expectations, but subsequently fell to 247,000 won as of the 30th of last month due to profit-taking and valuation concerns.

The analyst noted, “Earnings estimates are actually being revised upward, creating a widening gap between the stock price and fundamentals.”

He continued, “Considering the highest third-quarter revenue growth rate among the three ODM companies, quarterly revenue exceeding that of the second quarter despite the seasonal off-peak period, and the simultaneous recovery of overseas subsidiaries in the U.S. and China, we view the current stock price level—ahead of the earnings announcement—as an opportunity to increase holdings.”

Yuanta Securities Korea projected COSMAX, INC.’s full-year revenue for this year at 3.039 trillion won and operating profit at 272.8 billion won. These figures represent year-over-year increases of 26.7% and 39.3%, respectively. The firm forecast that next year, the company will record revenue of 3.44 trillion won and operating profit of 319 billion won.