Cosmetics stocks surge up over Berkshire Hathaway investment

Customers are selecting cosmetics at CJ Olive Young in Myeong-dong, Jung-gu, Seoul, a mecca for K-beauty. [Photo by Lee Chung-woo]

South Korean cosmetics stocks surged on Friday following the news that Warren Buffett’s Berkshire Hathaway Inc. invested in cosmetics retailer Ulta Beauty Inc.

Hankook Cosmetics Manufacturing Co. stocks were trading at 70,300 won ($51.61) per share as of 9:12 a.m., up 20.17 percent from the previous trading day and down from a 52-week high of 76,000 won earlier in the day.

Other cosmetics stocks also performed well, with Hankook Cosmetics Co. up 11.31 percent, Tonymoly Co. up 7.04 percent, VT Co. up 4.95 percent, and Kolmar Korea Co. up 3.33 percent.

Ulta Beauty, a beauty retail company that features many Korean cosmetics brands, saw its stock price surge by 11 percent on Thursday after the news that Berkshire Hathaway acquired about 690,000 shares in the second quarter of 2024.

In the Korean stock market, investors are showing strong interest in original equipment manufacturing (OEM) and original design manufacturing (ODM) companies, anticipating growth for brands entering Ulta Beauty.

Meanwhile, Korean mobile platform software company Uracle Co. stocks are trading at about 1.5 times their public offering price on the first day of listing on the Kosdaq.

Uracle stocks were trading at 32,500 won per share as of 9:12 a.m., up 54.76 percent from the public offering price of 21,000 won.

Founded in 2001, Uracle provides mobile application development, operation, and maintenance services for enterprises for over 1,000 clients, including major conglomerates like Hyundai Motor, LG, and SK groups. The company reported sales of 45.75 billion won and an operating profit of 3.1 billion won in 2024, and its flagship product, Morpheus, allows for the simultaneous development of Android and iPhone Operating System (iOS) apps from a single source.

In the institutional investor demand forecast, Uracle recorded a competition rate of 1,065.8 to 1, confirming the public offering price at the upper end of the desired range (18,000 to 21,000 won). In the public offering for general investors, it saw a competition rate of 1,080.44 to 1, with about 2.13 trillion won in deposits. But the mandatory holding commitment ratio is 0.55 percent, the lowest among newly listed stocks in 2024 to date, suggesting potential volatility.

CJ Corp. stocks also surged on Friday morning thanks to its subsidiaries. CJ stocks were trading at 130,900 won per share as of 9:25 a.m. up 14,100 won (12.07 percent) from the previous trading day.

CJ’s operating profit was 666.4 billion won for the second quarter of 2024, 13.6 percent higher than the market forecast of 586.5 billion won thanks to its major subsidiaries turning in strong performances.

Compared to the same period during the previous year, CJ Cheiljedang Corp. saw a 11.4 percent increase in operating profit, CJ CGV Co.’s profit increased by 41 percent, and CJ ENM Co. turned to profit. Unlisted subsidiary CJ Olive Young Corp. saw a 22 percent growth, achieving record performance both offline and online, while CJ Foodville Co. grew by 12 percent.

DS Investment & Securities Co. raised CJ’s target price from 170,000 won to 180,000 won on the same day. SK Securities Co. also expects CJ‘s stock price to rise, driven by CJ Olive Young’s growth potential in corporate value.