Goodai Global, often called "Korea's L'Oreal," faces a key question ahead of its initial public offering: whether it can convert the intangible assets built up through acquisitions into actual earnings. Analysts say the company must demonstrate profitability at the brands it bought and a stable ability to generate cash if it hopes to win a valuation of around 10 trillion won.
Goodai Global's consolidated revenue reached 1.4718 trillion won last year, roughly four times the 373.1 billion won posted a year earlier, according to filings with the Financial Supervisory Service's electronic disclosure system on the 22nd. Operating profit over the same period nearly doubled to 273.4 billion won from 137.8 billion won.
The jump reflects the consolidation of K-beauty brands. Goodai Global secured a 50% stake in Tir Tir in 2024, then acquired the remaining shares in March last year to take full ownership. In August last year, it bought Skinfood and Seorin Company, the operator of Round Lab, in quick succession. The company spent about 1.3313 trillion won acquiring the three businesses last year, with cash outflows from the business combinations totaling 844.6 billion won.
As the value of the acquired brands was recorded under intangible assets, the company's book assets swelled. Goodai Global's intangible assets stood at 1.6896 trillion won at the end of last year, an increase of 1.25 trillion won in a single year. That amounts to 59% of total assets of 2.8475 trillion won and four times total equity of 421.5 billion won. Of that total, goodwill from the three businesses acquired last year came to 510.3 billion won, industrial property rights including trademarks to 619.7 billion won, and customer relationships to 520.5 billion won. In other words, a substantial share of the value on the books depends on future earnings tied to brands and customers.
A larger pool of intangible assets does not translate directly into financial strain. But because some intangibles, such as trademarks and customer relationships, are expensed over fixed periods, they can weigh on future profits. Goodai Global's amortization of intangible assets came to 43.5 billion won last year, about 20 times the 2.2 billion won recorded a year earlier. A company official said Goodai Global regularly reviews amortization and potential impairment in line with accounting standards.
There is also a risk of additional impairment losses if the acquired brands fall short of expectations, which would reduce the carrying value of goodwill and other assets. Goodai Global has already written down 3.5 billion won of the 14.5 billion won in goodwill tied to I'm Unique, which it acquired for 23.5 billion won in September 2024, little more than a year after the purchase.
Results at the acquired brands have been mixed. Seorin Company posted net profit of 10.5 billion won in the four months after the acquisition. Skinfood recorded a profit of 3.6 billion won, though its inventory valuation losses rose to 1.4 billion won from 30 million won. Tir Tir booked a net loss of 4.6 billion won in the nine months after the acquisition, and its operating profit fell 93.6% to 2.5 billion won from 39.1 billion won.
An industry official said it is true that Tir Tir's performance has been relatively weak among the brands Goodai Global acquired, adding that not all of the acquired brands are delivering results in line with expectations.
The debt burden has grown as well. Goodai Global's debt-to-equity ratio more than doubled to 575.5% last year from 211.6% in 2024. Total borrowings, including loans and convertible bonds, quadrupled to 1.1565 trillion won from 289.8 billion won. Interest expenses came to 66.7 billion won last year, 12 times the 5.6 billion won recorded a year earlier.
An investment banking official said it has become common in the beauty industry in recent years to expand through mergers and acquisitions to secure growth drivers. The official added that because accounting costs such as amortization rise along with intangible assets, it is worth watching whether the brand values set at the time of acquisition translate into actual earnings and a stable ability to generate cash.