Cosmax turned to the red despite its good operating performance in the third quarter.
This is due to the damage to business rights caused by poor performance of its U.S. subsidiary Nu-World Corporation.
eBest Securities has lowered its target price to 160,000 won, although it maintains its "buy" opinion on Cosmax.
Ebest Securities said in a report on the 11th, "Cosmax's consolidated 3Q sales rose 23.2% year-on-year to 394.9 billion won, and operating profit rose 79.7% to 25 billion won, in line with our estimates and market expectations.".
"Despite the favorable business performance, the net loss in the third quarter turned into a deficit to 1.8 billion won," Ebest Securities said. "This is due to the reflection of 15.7 billion won in damage to business rights due to sluggish Nuworld corporate performance.".
Cosmax acquired US cosmetics company Nu-World in 2017. "We adjusted the estimated performance to reflect the performance of Nu-world, where recovery is delayed than expected," Ebest Securities said. "However, Korea and China's performance is very solid within business partners and the expansion of the proportion of online customers is positive.".
Cosmax recorded sales of 217.7 billion won and operating profit of 20.6 billion won in the third quarter.
Ebest Securities explained, "The domestic corporate operating profit ratio was high at 9.5% in the third quarter, even though it was off-season due to strong overseas exports and the release of hit products and focused on high margin products.".
In the case of China's performance, sales in the third quarter reached KRW 117.8 billion in Shanghai and KRW 33.6 billion in Guangzhou.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
