[Click eStock] "Aekyung Industrial, Recovery Expected This Year"

Yuanta Securities Issues 'Buy' Investment Opinion and Sets Target Price at 39,000 Won... Closing Price on 10th at 30,850 Won

[Asia Economy Reporter Kum Boryeong] An analysis has been raised that expects a recovery of Aekyung Industrial this year.

According to Yuanta Securities on the 11th, Aekyung Industrial's fourth-quarter results last year recorded consolidated sales of 194.1 billion KRW and operating profit of 16.6 billion KRW. Both grew by 10% and 22% respectively compared to the previous year.

Yuanta Securities gave a 'Buy' investment opinion on Aekyung Industrial. Eunjeong Park, a researcher at Yuanta Securities, said, "The basis is the end of the profitability decline in the cosmetics sector. Aekyung Industrial's operating profit margin in the cosmetics sector, which reached 20% in 2018, fell to 14% in 2019. The main reason was the reorganization of distribution channels for sales in China. The company shifted its approach to China from distributor-centered to direct response, facing a direct margin decline. Accordingly, it is estimated that the distributor ratio, which was close to 80%, fell to around 50%," adding, "This year is judged to be a turning point where profitability improves as direct sales expand and distributor scale is expected to recover significantly. The operating profit margin of the cosmetics sector this year is forecasted to improve by 1 percentage point from the same period last year to 15%."

However, due to the impact of the novel coronavirus infection (Wuhan pneumonia), most consumer goods companies with demand linked to China are expected to show poor first-quarter results, and Aekyung Industrial is also expected to follow a similar trend. Accordingly, operating profit for the first quarter is estimated to decrease by 50% from the previous year to 11.5 billion KRW, reflecting the possibility of a decline in duty-free and Chinese sales.

Yuanta Securities maintained Aekyung Industrial's target stock price at 39,000 KRW as before. The closing price on the 10th was 30,850 KRW.

This content was produced with the assistance of AI translation services.