Silicon Two's share price is on the rise as securities firms forecast that the company's third-quarter revenue will grow more than 30% year-on-year, driven by expanding K-beauty distribution demand centered on the United States and Europe. High growth rates are also expected in South America and the Commonwealth of Independent States (CIS) region, including Russia, but analysis suggests that increased costs from expanding overseas logistics infrastructure will weigh on profitability.

As of the morning of the 22nd, Silicon Two (257720) was trading at 32,800 won, up 500 won (1.55%) from the previous trading day.

■ Q3 Revenue Forecast of 397.3 Billion Won and Operating Profit of 76.7 Billion Won

Amid the stock's strength, IBK Investment & Securities projected that Silicon Two's revenue growth will continue, led by overseas markets. The firm estimated Silicon Two's consolidated Q3 2026 revenue at 397.3 billion won, a 32.7% increase from the same period last year. Operating profit was forecast at 76.7 billion won, up 21.7% year-on-year, with an operating margin of 19.3%.

■ Growth Rates by Region: South America, CIS, and Russia Stand Out Most

By region, South America and the CIS/Russia region are expected to see the largest increases.

▲ South America: up 82% year-on-year ▲ CIS/Russia: up 113% ▲ Europe: up 40% ▲ North America: up 33% ▲ Asia: up 9% (lower than other regions)

While growth speeds vary by region, a key feature of this forecast is that revenue increases are expected simultaneously across multiple markets, including Europe, North America, South America, and CIS/Russia.

■ Growth Driven by Expanding Overseas Distribution Demand for K-Beauty

Behind Silicon Two's growth lies the expanding overseas distribution demand for K-beauty brands. IBK Investment & Securities projected that as distribution demand for Korean cosmetics brands grows, centered on the U.S. and Europe, the company's strong top-line growth will continue. The expansion of sales countries for existing partner brands was also cited as a revenue growth factor. As distribution regions for brands already supplied widen while new brand supplies increase, overall revenue is expected to expand.

■ Logistics and Distribution Costs a Variable: Profit Growth 11.0 Percentage Points Lower

However, a gap is expected between revenue growth and operating profit growth. The Q3 revenue growth forecast is 32.7%, but operating profit growth is estimated at only 21.7% — 11.0 percentage points lower than revenue growth.

IBK Investment & Securities attributed this gap mainly to increased costs from expanding overseas logistics infrastructure and distribution channels. As sales regions and supplied brands increase in overseas markets, logistics and distribution costs may rise in tandem. Notably, cost burdens from logistics infrastructure expansion may arise even in regions with high revenue growth, meaning top-line growth and profitability improvement will not necessarily proceed at the same pace.

■ Key Points to Watch

Accordingly, in Silicon Two's future results, not only overseas revenue growth but also the scale of cost increases from distribution network expansion are expected to be key variables. As K-beauty distribution demand continues to expand in the U.S. and Europe, attention is focused on whether the high growth forecasts for South America and CIS/Russia translate into actual revenue. How much the expansion of sales countries for existing brands and increased new brand supplies contribute to earnings growth will also be closely watched.

Silicon Two is expected to post double-digit growth in both revenue and operating profit in Q3 this year, but it also faces cost burdens from overseas business expansion. How stably it can manage its operating margin while maintaining top-line growth is likely to be a key criterion for evaluating its performance.

[This article is provided for informational purposes for investment reference and does not recommend buying or selling any specific stock. Circumstances may vary depending on market conditions. Investment decisions and any resulting responsibility rest with the investor. AI provided partial assistance.]