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Attractive entry point

4Q25 review: Better-than-expected standalone earnings

For 4Q25, Kolmar Korea posted revenue of W655.5bn (+11% YoY) and operating profit of W47.8bn (+36% YoY), slightly below consensus estimates. However, excluding one-off costs (W6.1bn in additional bonus provisions, W2.6bn in partner incentives, and W1bn in sales guarantees), the results were better than expected.

The domestic (standalone) business reported revenue of W268.3bn (+11% YoY) and operating profit of W22.3bn (+24% YoY; OP margin of 8.3%), with both top-line growth and profitability surpassing expectations. While line adjustments for global multinational customers had been expected to partially disrupt indie brand revenue, stronger-than-expected demand from indie brands supported solid growth. Notably, an indie brand that has been performing well globally appears to have become one of Kolmar Korea’s 10 largest customers by revenue. Margins also improved YoY and remained in the double-digit range when excluding one-off costs (despite seasonal weakness).

The US business posted revenue of W6.7bn (-67% YoY) and an operating loss of W8.3bn (turning to red; -W9.5bn YoY), reflecting a deepening slowdown. Orders from Plant 1’s key customer have fallen sharply since 3Q25, and management maintains a conservative outlook for this customer going forward. However, we expect earnings to improve in 2H26 as Plant 2 begins to make a meaningful contribution.

The China business posted revenue of W32.9bn (+10% YoY) and an operating loss of W1.6bn (remaining in the red; +W0.1bn YoY). While weak seasonality led to a continued loss, there were no extraordinary developments from an operating standpoint.

Strong standalone earnings and attractive valuation (11x 12-month forward P/E)

The standalone business is seeing accelerating earnings momentum. We expect standalone revenue to rise more than 20% YoY in 1Q26, with margins likely to remain resilient compared to peers. Growth in indie brand orders should remain a key driver alongside contributions from global multinational customers. While the underperformance of subsidiaries is disappointing, we expect strong standalone earnings momentum to increasingly be reflected in the share price, considering the stock’s absolute undervaluation (12-month forward P/E of 11x; vs. 21x for the sector and 17x for Cosmax). We view the current level as an attractive entry point.