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(Source: Korea Kolmar) |
[Alpha Biz= Kim Sangjin] Daishin Securities has lowered its target price for Korea Kolmar from 100,000 KRW to 80,000 KRW, a 20% decrease, citing expectations that the company's Q4 2023 earnings will fall short of market expectations.
In a report released today, Daishin Securities projected Korea Kolmar's Q4 revenue at 601.1 billion KRW and operating profit at 46 billion KRW. These figures are below the market consensus of 621 billion KRW and 53 billion KRW, respectively.
Daishin explained, "The proportion of high-margin finished products decreased seasonally, and one-off labor costs increased, limiting margin improvement." The report also noted that while the U.S. subsidiary is expected to achieve strong sales growth and turn a profit thanks to new client acquisitions, performance in Canada and China will likely remain weak.
The report emphasized that improvements in overseas subsidiary performance would be essential for a rebound in Korea Kolmar's stock price.
Additionally, Daishin highlighted continued cost burdens from the company’s R&D center and the pace of securing orders for its second plant.
On a positive note, Daishin pointed out that Korea Kolmar’s domestic annual production capacity increased from 370 million units in 2023 to 530 million units by the end of last year. "This year, sales are expected to grow, particularly for high-margin skincare and finished products, leveraging the expanded production capacity. Moreover, ahead of the new operation of the U.S. second plant in the second half of this year, the successful turnaround of the U.S. first plant is positive, as it has reduced fixed cost burdens," the report stated.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
