April 20, 2024

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[THE INVESTOR] Cosmecca Korea will be slow in the first quarter but its revenue in the next quarter will be a record high, said Shinhan Investment on April 13, raising the target price to 74,000 won (US$69.09) from 66,000 won.

Its revenue in the first quarter will stand at 50.9 billion won, up 0.7 percent on-year, while operating profit will halve to 2.4 billion won, as exports to the US struggle and Chinese operations remain in the doldrums, said analyst Lee Ji-yong.

In the second quarter, however, revenue will leap 40.5 percent on-year to record 70 billion won and operating profit will gain 9.1 percent to 5.7 billion won, estimated the analyst. 

Clients whose main market is China will put in more orders pushing revenue up, and although operating profit ratio will be brought down by increase in orders for low-margin products, over 40 percent hike in revenue will more than offset the decline, said Lee.

Regardless of whether tourists from China will return, investors should consider the growth of its revenue from domestic clients and relatively attractive price-earnings ratio, said the analyst maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)