Once one of top beauty houses, Hankook Cosmetics Co., is being heavily chased by investors as the next possible Korean beauty blockbuster after it deliver strong performance in the first quarter.

According to the nation’s securities exchange operator Korea Exchange (KRX) on Sunday, Hankook Cosmetics shares surged 41.4 percent over the last month, far outperforming its rivals including AmorePacific with a growth of 18.5 percent over the same period, LG Household & Healthcare with 15.6 percent and Kolmar Korea with 6.3 percent.

The main driver behind the recent rally in its stocks is an improvement in its earnings.

Founded in 1962, Hankook Cosmetics was once the nation’s leading cosmetics brand. But it fell from grace as it failed to keep up with the rapidly changing market trend in the 2000s. Its financial health deteriorated despite restructuring efforts through split-up into cosmetic sales and real estate business as well as a cosmetics manufacturing business. Its new brand The Same launched in 2010 made little impression. In 2014, the company was forced to sell its headquarters building in Seorin-dong in central Seoul for 83.7 billion won ($74.8 million).

The company finally swung to a profit of 15.7 billion won last year. Market experts believe its full 2017 operating profit would amount to 30 billion won this year. Operating profit of Hankook Cosmetics is expected to soar 45.2 percent on year to reach 7.6 billion won in the second quarter ended June this year, according to analysis made by the nation’s securities companies, while its rivals are expected to see declines in the bottom line by 16.8 percent for AmorePacific, 12.2 percent for Cosmax and 4.4 percent for LG Household & Healthcare over the same period.

Despite its stocks’ stellar performance, its price to earnings ratio (PER) is estimated at 13.3, the lowest among local cosmetics firms, which means its stocks are still undervalued and there is more room to grow.

Its return on equity (ROE) is also forecast to be 45.2 percent, almost twice more than that of 22.8 percent for LG Household & Healthcare.

As of 2:25 p.m. on Monday, shares of Hankook cosmetics rose 1.9 percent to 21,500 won in Seoul trading.

By Moon Il-ho

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]