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Driven by rapid revenue growth and improved profitability at its domestic and U.S. subsidiaries, Cosmax posted third-quarter results that exceeded market expectations this year. With expanded production capacity through domestic plant expansions and rising profit contributions from overseas affiliates also anticipated, securities firms have successively raised their target prices.
According to the financial investment industry on the 12th, Cosmax's consolidated revenue for the third quarter of this year was 875.8 billion won, up 49.5% year-on-year. Operating profit rose 95% to 83.3 billion won, surpassing the market forecast of 78.2 billion won.
Revenue growth rates by subsidiary were recorded at 61% for Korea, 27% for China, 88% for the U.S., 34% for Indonesia, and 7% for Thailand. In particular, domestic headquarters revenue reached 616.1 billion won, a 60.7% year-on-year increase, marking the first time quarterly revenue surpassed 600 billion won. Revenue from the U.S. subsidiary also increased by 88.3% to 69.5 billion won.
The domestic business saw improved profitability alongside revenue growth. Strong exports from skincare clients, the launch of new color cosmetics products, and promotional effects drove performance. The expansion of the share of high-margin basic cosmetics and improvements in production efficiency further contributed, resulting in an operating profit margin of 11.0% for the domestic headquarters. This represents a 2.1 percentage point increase year-on-year.
The U.S. subsidiary is expanding revenue centered on local indie brands. The growth background lies in increased orders driven by rising demand for functional cosmetics and derma skincare. Hana Securities estimated that the U.S. subsidiary's third-quarter operating profit turned profitable at 3.5 billion won, compared to a loss in the same period last year.
Outlook for improved profitability at the U.S. subsidiary is also positive. Shinhan Investment Corp noted guidance indicating that this year's operating profit margin is expected to rise to single-digit levels, with a target of reaching double digits next year. Hana Securities projected that the U.S. business operating profit margin will improve to 7-8% next year.
The China subsidiary continued its growth trend, driven by increased orders for color cosmetics, expanded revenue from major clients, and the launch of new skincare products. Southeast Asian subsidiaries, including those in Indonesia and Thailand, also maintained stable revenue growth.
Expansion of domestic production capacity is also cited as a medium- to long-term growth driver. Domestic plant utilization rates exceed 85%, effectively approaching maximum production capacity. The Pyeongtaek Plant No. 1 has completed approximately half of its expansion work and began operating new equipment from the end of the third quarter. Hana Securities forecast that annual production capacity at domestic plants will reach 1.1 billion units by year-end, an increase of approximately 10% over the previous year.
The growth trend is expected to continue in the fourth quarter as well. Hana Securities projected fourth-quarter consolidated revenue and operating profit at 893.6 billion won and 74.9 billion won, respectively. These figures represent year-on-year increases of 48.7% and 83.1%, respectively. Shinhan Investment Corp also forecast that high growth centered on Korea and the U.S. will continue, while China and Southeast Asian subsidiaries are expected to maintain revenue growth rates comparable to the previous quarter.
Securities firms raised target prices to reflect improved performance and expanded production capacity. Shinhan Investment Corp maintained Cosmax as a top pick and issued a "Buy" recommendation. The target price was raised by 17.1% from the previous 350,000 won to 410,000 won. This follows a 13% upward revision of the estimated net income attributable to shareholders for 2027, while maintaining a forward 12-month price-to-earnings ratio (PER) of 16 times.
Hana Securities also maintained its "Buy" recommendation while raising the target price from the previous 380,000 won to 420,000 won. This reflects improved performance at the domestic headquarters and U.S. subsidiary, as well as expanded production capacity resulting from the Pyeongtaek plant expansion. The estimated operating profit for next year was also raised from the previous 352.1 billion won to 381.8 billion won.
The securities industry views Cosmax's performance growth as becoming more robust, driven by the combination of expanded domestic production capacity and improved profitability at the U.S. subsidiary. Expectations for medium- to long-term profitability improvements are also growing, given the increasing profit contribution from overseas affiliates.
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*This content was translated by AI.View Original
