Hana Securities estimates that Cosméca Korea (KOSPI: 241710), a contract cosmetics manufacturer, will report second-quarter consolidated revenue of 201 billion won and operating profit of 28.5 billion won, each representing 24% growth year on year.
The primary driver is the domestic business division, where robust export demand from indie beauty brands is expected to fuel 37% revenue growth compared with the same period last year. The South Korean arm of Englewood Lab, a Cosméca subsidiary, is forecast to see margin pressure due to weaker orders from a major client identified only as "Company G"; however, analysts believe the strong performance of the core domestic business will more than offset that drag.
Hydrogel face masks are rapidly becoming a fresh growth engine. The company's hydrogel production lines — four in total, which came into full operation in January — are running at full capacity as of July. Hydrogel segment revenue, which fell short of 2 billion won in the second quarter, is projected to reach 10 billion won in the third.
The client base is also broadening. Dal.lba Global and Medicube have newly entered the company's top-five and top-ten customer rankings, respectively. Several other indie brands — Cellymaxe, On:Griedients, and Menokin — are also making a growing contribution to revenues.
For the second half of the year, Hana Securities projects domestic business revenue of 140 billion won in the third quarter and 130 billion won in the fourth, while noting that actual figures could come in 10 billion to 20 billion won higher than those estimates in each period. June cosmetics exports from South Korea surged 42% year on year, hitting a record high and reinforcing the momentum behind the sector.
Despite these prospects, Hana Securities characterises Cosméca Korea's current share price as significantly undervalued, noting that it trades at just 11 times its 12-month forward price-to-earnings ratio. The brokerage has not assigned a formal investment rating to the stock.