The domestic stock market has been heating up this year, with the KOSPI rising daily led by AI semiconductors, defense, and shipbuilding, reshaping corporate market capitalization. While market attention was previously focused on semiconductors and heavy industries, the cosmetics sector stands out in consumer goods, with a notable revaluation. K-beauty companies, once heavily dependent on the Chinese market, are expanding into North America, Europe, Japan, and Southeast Asia. ODM firms are absorbing benefits from global indie brand growth, leading to rapid stock and market cap shifts. After Q1 earnings reports, the cosmetics sector's divergence became clearer. Traditional large firms face a test of restructuring away from China's downturn, while ODM companies see stock prices reflecting export growth and efficiency improvements. Emerging brands like APR and D'Alba Global are challenging incumbents with expanding overseas sales. Amorepacific, a traditional cosmetics leader, reported Q1 consolidated sales of KRW 1.1358 trillion (up 6.4% YoY) and operating profit of KRW 126.7 billion (up 7.6% YoY), driven by domestic and Western markets. Domestic growth came from online, multi-brand shops (MBS), and department stores, with MBS growing over 30% due to tourist demand and flagship product sales. Overseas, North America, EMEA, and other Asia saw double-digit growth, while China sales declined due to offline channel rationalization for Sulwhasoo. The company is shifting focus from China to Western markets, Japan, and other Asia. Securities firms note brand and channel diversification, with SK Securities raising the target price to KRW 180,000, citing Cosrx turnaround and brands like Estra and Illiyoon growing via Sephora and Amazon. However, challenges remain, including slowing Laneige North America sales, rising overseas marketing costs, and China weakness. Hana Securities noted Q1 results met expectations but overseas operating profit fell YoY. LG Household & Health Care returned to profit in Q1 after a Q4 loss, but sales and operating profit declined YoY, indicating more time is needed for full recovery. The stock recovery of traditional giants depends on building stable growth outside China.
ODM firms show the clearest earnings improvement. Kolmar Korea reported Q1 consolidated sales of KRW 728 billion (up 11.5% YoY) and operating profit of KRW 78.9 billion (up 31.6% YoY), exceeding expectations and hitting record highs. Domestic operations drove growth, with sales to major clients and global luxury brands expanding, especially in sun care. Utilization rates rose to 78% due to surging European and non-US sun care demand. Securities firms raised targets: Hanwha Investment & Securities to KRW 120,000, Hana Securities to KRW 125,000, and SK Securities to KRW 120,000, citing strong industry and earnings. Cosmax posted Q1 sales of KRW 682 billion (up 15.9% YoY) and operating profit of KRW 53 billion (up 10.9% YoY). However, profitability slightly missed expectations, with SK Securities noting a 4% shortfall due to a product mix shift toward lower-margin hydrogel masks and away from high-margin color cosmetics. Still, growth remains intact: basic skincare sales rose 41% on indie brand exports, and China and US units expanded. SK Securities raised the target to KRW 250,000, expecting improved profitability in H2 as color cosmetics base effects ease and production efficiency improves. Among emerging stocks, APR is rising fastest. APR reported Q1 consolidated sales of KRW 593.4 billion (up 123.0% YoY) and operating profit of KRW 152.3 billion (up 173.7% YoY). Overseas sales reached KRW 528.1 billion, 89% of total. US sales surged 251% to KRW 248.5 billion, and new growth country sales rose 149% to KRW 220.7 billion. Channel expansion in the US is rapid: 11 products entered Amazon's Big Spring Sale top 100, and Ulta Beauty online SKUs expanded to over 40. In Europe, entry into about 450 Sephora stores is underway. Hanwha Investment & Securities noted APR began Target entry in the US, with Walmart (4,611 stores) and Costco (637 stores) expansions expected in Q2-Q3 2026, boosting offline US sales. APR's market cap has reached KRW 15 trillion, rivaling traditional giants. Hana Securities set a target of KRW 540,000, while Eugene Investment & Securities and SK Securities set KRW 510,000. Analysts view APR as a structural growth stock, not a theme play, due to expansion from US online to US offline, European online/offline, and B2B channels. LS Securities highlighted strong growth potential in Europe.
D'Alba Global is also growing fast, with Q1 sales of KRW 171.2 billion (up 50.4% YoY) and operating profit of KRW 45.1 billion (up 49.9% YoY). Overseas sales accounted for 68.7% of total, at KRW 117.6 billion, with Japan KRW 36.8 billion, North America KRW 24.3 billion (up 192.8%), Europe KRW 13.8 billion (up 213.6%), ASEAN KRW 18.2 billion, and China KRW 9.7 billion. The company is expanding from Japan and Russia into North America and Europe, with Ulta and Costco offline expansions in North America and potential entry into Costco, Boots, DM, Rossmann, and Sephora in Europe. Eugene Investment & Securities raised the target to KRW 320,000 from KRW 220,000, reflecting overseas channel growth. This year's cosmetics stock rally differs from the past, which relied on Chinese tourists, duty-free channels, and Hallyu consumption. The current rise is based on North American and European sales growth, ODM exports, brand global channel entries, and indie brand growth. Market cap shifts reflect this: traditional giants like Amorepacific and LG H&H still hold symbolic value, but the market no longer grants high valuations solely on China growth. Instead, companies like APR (nearly 90% overseas sales) and D'Alba Global (triple-digit growth in North America and Europe) command premiums. ODM firms are evolving from contract manufacturers to partners in product planning, development, and production, becoming 'beauty tech' firms with AI-based formulation and smart manufacturing. A securities industry source said, 'The recent rise in cosmetics stocks is not a simple theme but based on fundamental improvements confirmed by export data and Q1 earnings. Market cap reshuffling is likely to continue around companies reducing China dependence and expanding North American and European channels.' However, short-term volatility is a risk due to rapid price increases. High exchange rates may benefit exporters but raise raw material and logistics costs. US tariffs and Middle East geopolitical risks remain cost variables. Cosmetics sector earnings can be volatile due to hit product lifecycles, channel inventory, and marketing spend.
Source: Read the original report | Published: May 14, 2026