South Korean cosmetic maker Tonymoly made a strong debut on the Seoul bourse Friday as it seeks to tap deeper into China for new growth beyond the saturated domestic beauty market.
Its shares opened at 64,000 won (US$56.57), double the initial public offering (IPO) price of 32,000 won, on the main KOSPI market. They were trading at 67,900 won as of 9:15 a.m., up 6.09 percent from the opening price.
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. (Yonhap)