1. What’s Happening with CNC International?

Despite continued sales growth in the first half of 2025, CNC International experienced a significant decline in profitability. Operating profit decreased by 53% year-on-year to KRW 14.24 billion, and warning signs are flashing regarding financial soundness due to increased inventory assets, accounts receivable, and total liabilities. Heavy reliance on lip makeup products is also a concerning factor for future growth.

2. Why is this happening?

Increased cost of goods sold and selling, general and administrative expenses are the primary factors contributing to the decline in profitability. The company’s vulnerability to market fluctuations due to its high dependence on specific product categories is also a structural issue.

3. Key Points to Watch During the IR

  • ① Profitability improvement strategies: Cost reduction and efficiency measures.
  • ② Strengthening financial soundness: Debt management and capital enhancement plans.
  • ③ New growth engines: China market growth strategy and new product development plans.
  • ④ Customer diversification strategy: Measures to mitigate dependence on specific products.
  • ⑤ Response to changes in the business environment: Strategies to cope with raw material price fluctuations and exchange rate volatility.

4. Action Plan for Investors

Carefully analyze the IR presentation and evaluate the feasibility of the proposed strategies. A cautious approach is recommended, focusing on observing market reactions rather than immediate investment. Prudent investment decisions should be made until there is clear evidence of improved financial health and performance recovery. Consider small investments or a dollar-cost averaging strategy.