The authors are analysts of Shinhan Securities. They might be reached at [email protected] and [email protected]. – Ed.
Global demand for cosmetics and components on the rise
Sunjin Beauty Science focuses on manufacturing and supplying inorganic ultraviolet (UV) filters like zinc oxide and titanium dioxide. The firm generated gross sales of KRW46.7bn and working revenue of KRW4.1bn within the first three quarters of 2022, each recording over 30% YoY progress. At this tempo, full-year numbers are anticipated to exceed the market consensus set initially of the 12 months (gross sales of KRW52.5bn, working revenue of KRW4.5bn). We imagine the corporate’s earnings are positively affected by the rising international demand for cosmetics following the financial reopening of North American and European international locations.
We see demand for UV filters, the corporate’s principal supply of gross sales, steadily rising from key shoppers together with L’Oréal. UV filters are utilized in a variety of cosmetics merchandise, akin to skincare and make-up merchandise. It is seen constructive that the worldwide pattern towards stricter environmental rules will assist enhance demand for inorganic UV filters.
Declining fastened prices, deal with new enterprise growth
The firm’s fastened price burden is anticipated to ease regularly with the completion of manufacturing integration at its new Janghang manufacturing facility, which is now up and working. Fixed prices have declined on greater manufacturing effectivity in comparison with its earlier Ansan manufacturing facility. Profit progress outpaced gross sales progress in 1H22. Production capability of the Janghang manufacturing facility is within the KRW75bn-80bn vary, which might go above KRW150bn if a shift work system is adopted. The firm stands to get pleasure from strong earnings progress due to regular order influx from new European and North American shoppers.
Adding to the event of beauty components, the corporate revealed a long-term plan to take a leap as a magnificence care ingredient platform firm by selling its proprietary model iRecipe. We anticipate the corporate to deal with the growth of latest companies, leveraging on its community established within the abroad B2B cosmetics market.
Stable progress anticipated for the beauty ingredient provider
Sunjin Beauty Science has delivered regular top-line progress as functions of UV filters are increasing right into a wider vary of cosmetics merchandise. As one in all a handful of beauty ingredient suppliers sharing within the progress potential of worldwide cosmetics makers, the corporate’s power lies in its secure progress. We anticipate Sunjin Beauty Science to proceed to look comparatively extra engaging vs. sector friends in view of its sturdy progress stability.
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