[THE INVESTOR] Cosmax will be able to recover from the THAAD row aftermath and expand overseas, said Eugene Investment and Securities on Nov. 14, maintaining a “buy” recommendation and 150,000 won (US$134.20) target price.
Its sales have been seriously hit by the decline in Chinese inbound tourism as its single-brand stores, which are heavily dependent on Chinese visitors, account for 45 percent of domestic revenue, said analyst Lee Seon-hwa.
Its revenue in the third quarter rose 12 percent on-year to 208.5 billion won but operating profit fell 57.8 percent to 5.0 billion won, and its earnings this year will remain slow, said the analyst.
From next year however the cosmetics ODM maker will begin to expand overseas in earnest as it completes taking over US ODM company NU-World, noted Lee.
Although NU-World is a makeup product specialist, its gross margin ratio is 26.9 percent, and Cosmax will be able to improve profitability through cost control and maximizing efficiency after the acquisition, she forecast.
By Hwang You-mee (firstname.lastname@example.org)