Invest1 publisher2 min readPublished
Daiwa walks its clients through five Korean beauty companies in two days
Daiwa's tour covered two contract manufacturers, two brand owners and an aesthetics device maker. The foreign stakes already disclosed in the sector cluster inside a band 0.80 of a percentage point wide.
The Investor · Invest desk
What happened
- Daiwa Securities ran a two-day "Daiwa K-Beauty Insight Tour" of leading Korean beauty companies starting Sept. 10, according to industry sources cited on the 12th.
- The itinerary covered contract manufacturers Kolmar Korea and Cosmax, brand owners APR and Amorepacific, and medical aesthetics company Hugel.
- Macquarie held its "K-Beauty Conference: Seoul to Skin" from Nov. 12 to 14 last year, with meetings including APR, Pum-Tech Korea, Classys, Dalba Global, Kolmar Korea, Hugel and LG H&H.
- Fidelity Management & Research holds 4.85% of APR, Fidelity International owns 5.19% of Dalba Global, and Morgan Stanley holds 4.39% of Pharma Research.
- Cosmax's major shareholders include Norges Bank, manager of Norway's sovereign wealth fund, and the Singapore government together with its sovereign wealth fund.
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Why it matters
- capability An itinerary that includes two ODM manufacturers and a device maker gives foreign funds a way to own K-beauty volume growth without deciding which brand keeps its shelf space.
- constraint The stake percentages are public but undated, so a reader cannot tell whether the foreign money arrived this year or years ago, and the freshness of the story leans on the tour calendar.
- precedent Two global brokerages have now run the same kind of Seoul beauty itinerary about ten months apart, and Korean beauty IR teams can reasonably plan for a third.
- exposure APR is the most exposed name here, sitting on both brokerage itineraries and carrying a disclosed foreign holder, so it absorbs both the sell-side attention and the fund flow that follows it.
Nine listed Korean companies appear across the two brokerage itineraries, and four of them turn up on both: Kolmar Korea, Cosmax, APR and Hugel [1]. Add Pharma Research, which shows up only in the ownership disclosures, and the named universe is ten [2].
Daiwa held about $240.1 billion in total assets at the end of March [2]. Two days of analyst and client time against that is a cheap way to test a sector. What the group got was access: company executives briefing them on operations and key products at four sites in a single day [4][4]. Macquarie's group last November also walked the retail end, touring Cosmax's R&D center, APR's flagship store in Seongsu-dong and the Olive Young N Seongsu store [6].
The disclosed positions are the harder evidence, and they cluster tightly, from 4.39% at the bottom to 5.19% at the top, a band 0.80 of a percentage point wide [3].
Industry officials attribute the change to a run of record earnings and to sales spreading out of China into North America and then Europe, Latin America and the Middle East [11][12]. "As K-beauty companies raise the share of revenue from overseas and diversify into more regions," one of them said, "global investors appear to be starting to treat it as an investment sector in its own right" [13].
I would weight the filings above the tours. A two-day itinerary commits a brokerage's calendar; a stake of that size in a Korean mid-cap commits money that has to find a buyer before it can leave [1][8].
Say the two sovereign holders on Cosmax's register are there on broad index mandates. Then the active money named in this account is two Fidelity entities and one Morgan Stanley line, and the report does not say which of the two it is [6][7]. The second test is the revenue mix: if the overseas share stops rising, the value-chain framing reduces to the handful of brands that industry officials say foreign investors used to buy [12][13].
What to watch
- Whether Fidelity Management & Research's 4.85% of APR moves higher or out of the reporting range at its next disclosure.
- Whether a third global brokerage schedules a Seoul beauty itinerary, and whether Kolmar Korea, Cosmax, APR and Hugel stay on it.
- Whether Daiwa publishes research on any of the five companies its tour visited.