Business · Companies · 4 hrs ago
KB Securities cuts Silicon2's price target as earnings miss expected
KB Securities expects Silicon2's third-quarter results to miss forecasts and cut its price target from 65,000 won to 52,000 won, while keeping its buy rating.
Silicon2 buys South Korean beauty brands in won and sells them overseas, so currency movements can affect its profits.
The brokerage expects revenue of 423 billion won and operating profit of 69.2 billion won, with operating profit hurt by a stronger won and higher shipping and marketing costs.
The currency shift is expected to squeeze profit margins despite the quarter being a seasonal busy period.
A quieter fourth quarter may limit near-term growth, as global retailers adjust stock and buy less from suppliers.
Silicon2 is expanding its distribution network with new warehouse capacity in Europe and plans for Brazil, while North American retailers are increasing their K-beauty sourcing.
The company is preparing to serve growing demand in South America, with its Mexico operation already running and a Brazil unit and warehouse planned.
KB Securities lowered its price target for Silicon2 to 52,000 won from 65,000 won, while maintaining its buy recommendation.
The brokerage expects Silicon2’s third-quarter revenue and operating profit to fall short of market forecasts.
KB Securities estimates revenue of 423 billion won and operating profit of 69.2 billion won for the quarter.
It attributed pressure on margins to a sharp decline in the exchange rate, as well as higher freight and marketing costs.
KB Securities said near-term earnings momentum would be limited but described the company’s medium- and long-term growth prospects as intact.
- Who
- KB Securities lowered its price target for Silicon2.
- What
- It cut the target to 52,000 won from 65,000 won and kept its buy recommendation.
- When
- The report was dated October 30; the article was published on October 29, 2026.
- Where
- Not stated.
- Why
- KB Securities expected third-quarter results to miss market forecasts, citing currency effects and higher freight and marketing costs.
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- Price target
- Cut to 52,000 won from 65,000 won
- Recommendation
- Buy, maintained
- Third-quarter revenue estimate
- 423 billion won, 1.1% below market consensus
- Third-quarter operating profit estimate
- 69.2 billion won, 16.7% below market consensus
- Gross profit margin estimate
- 28.0%, down about 4 percentage points from the previous quarter
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What people are saying
The business structure of buying domestic brand products in won and selling them overseas means earnings are highly sensitive to exchange rates.
Although the third quarter is a seasonally strong period, the sharp decline in the exchange rate is expected to lower the gross profit margin by about 4 percentage points from the previous quarter to 28.0%.
With global retailers adjusting inventory in the fourth quarter, purchasing volumes will decrease in the off-season, so near-term earnings momentum will be limited.
The region where growth acceleration is expected in particular is South America.