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(Courtesy of Getty Images) Cosmetics and beauty stocks of South Korea are benefiting from president-elect Yoon Seok-yeol’s pledge to alleviate social distance regulations. Cosmetics stocks, undervalued with the recent plunge in prices, are expected to rally thanks to investors hopeful for relaxation on pandemic-related restrictions.Skincare giant Cosmax Inc., original design manufacturer (ODM) for global brands such as L'Oréal, and Johnson & Johnson, closed at 82,300 won ($67.24) on March 25, up 1.35%. The stock price rebounded by around 21% from its 52-week low of 68,000 won ($55.56) on Jan. 28, boosted by expectations on reopening shares. Major ODM Kolmar Korea Co., a supplier to Estee Lauder and other global big brands, closed at 41,950 won on Friday, with a 23.7% jump from a 52-week low of 33,900 won on Jan. 28. ODMs are said to be sensitive to changes in demand of the market, garnering attention when demand increases. Another makeup product ODM C&C International Co. is also expected to benefit.When expectations on reopening shares increased, cosmetics & beauty stocks fluctuated as demands for cosmetic products remained sluggish due to mask-wearing regulations. President-elect Yoon is considering easing social distance by repealing mask mandates outdoors, which could be favorable to cosmetics shares. Recovery of travel demand also could benefit cosmetics sales in duty-free shops.Undervalued stocks of cosmetics firms are already attracting investors. The 12-month forward price-to-earnings ratio of conglomerate Amorepacific Corp. is 31.3 times, much lower than 50 times a year ago. Cosmax’s 12-month P/E ratio is 9.8 times, nearly half of 19.1 times a year ago. The stocks will enjoy stable growths in Korean and Chinese markets in line with economic recovery, said Korea Investment & Securities Co. analyst Myung-joo Kim.By Yun-Sang Kokys@hankyung.comJihyun Kim edited this article.
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