Amorepacific Confirms Bottom, Expects Profit Growth from Q3 Onwards

[Asia Economy Reporter Oh Ju-yeon] Amorepacific, which had been trading sideways in the 170,000 KRW range since last April, is analyzed to have secured downside rigidity. Amorepacific's stock price rose to the 200,000 KRW range earlier this year but fell to the 150,000 KRW range due to poor earnings and the overlapping impact of the novel coronavirus infection (COVID-19). Although it succeeded in rebounding afterward, it has fluctuated around the 170,000 KRW range since last month.

According to KB Securities on the 1st, Amorepacific's second-quarter earnings are expected to be sluggish, but it is estimated to return to a growth trend from the third quarter.

Amorepacific's consolidated earnings for the first quarter of this year recorded sales of 1.1309 trillion KRW and operating profit of 60.9 billion KRW, down 22% and 67%, respectively, compared to the same period last year. KB Securities forecast that Amorepacific's second-quarter sales will decline by 9% year-on-year, and operating profit will decrease by 30%.

Researcher Park Shin-ae stated, "Domestic sales are expected to fall by 8%, and Chinese sales by 9%. Sales in the Americas, Europe, and Southeast Asia are estimated to drop sharply by around 20-40% due to store closures caused by COVID-19." However, since Chinese consumption?which accounts for more than 80% of the company's operating profit (30% from the Chinese corporation and 50% from duty-free shops)?is recovering, the overall performance is assessed to be gradually stabilizing from the first quarter low point.

Researcher Park added, "Although the deterioration in performance during the peak season of the first and second quarters is regrettable, from the third quarter onward, the operating environment will normalize, and restructuring will proceed smoothly, leading to improved profitability compared to the same period last year."

Researcher Park said, "Since the first-quarter earnings, which were the biggest concern, met market expectations, it is judged that the stock price has bottomed out in the 170,000 KRW range," adding, "From the second quarter, domestic and Chinese earnings are expected to gradually recover, which will improve investor sentiment and lead to a gentle upward trend in the stock price." She further noted, "In the short term, the stock price is expected to react sensitively to indicators related to Chinese consumption."

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