SEOUL, Jul. 10 (Korea Bizwire) — South Korean cosmetic maker Tonymoly almost doubled its initial public offering (IPO) on Friday, but erased part of its earlier gains over a mixed outlook on its bid to tap deeper into China as a new growth engine beyond the saturated domestic market.
Its shares opened trade at 64,000 won (US$56.57), double the IPO price of 32,000 won, on the main KOSPI market, but ended at 50,500 won. The broader market climbed 0.17 percent.
Their market capitalization came at 593.9 billion won.’
Buoyed by a strong rally of cosmetic shares earlier this year, its listing has drawn keen attention from retail investors. Its shares were 771 times oversubscribed last week.
Tonymoly, the nation’s seventh-largest cosmetic brand by 2014 sales, has posted double-digit growth since its establishment in 2006 and has about 1,800 shops in 20 nations, including Hong Kong, the United States and Russia.
Tonymoly logged 305.2 billion won in sales last year, with 11.4 percent coming from duty-free shops and stores in Myeongdong, which heavily rely on Chinese consumers.
Market watchers expressed hope for increased sales from rising online cosmetic stores in China, while worrying that tough competition among mid-priced brands may slow Tonymoly’s growth due to rising marketing costs and price discounts.
Although the K-beauty boom has upgraded brand images of Korean cosmetics overall, a possible trend reversal could negatively affect sales overseas, KDB Daewoo Securites, its IPO manager, said in a report.
“If Chinese cosmetic makers show high growth, Tonymoly’s market share in China may not significantly expand,” KDB said.
China’s cosmetics market is the world’s third-biggest market, worth $26 billion a year, global market researcher Euromonitor said, expecting it will grow 8 percent each year from now to 2017.