[Click eStock] "AmorePacific Experiencing Delays in Business Recovery"

Korea Investment & Securities Issues 'Buy' Rating and 190,000 KRW Target Price... Closing Price on 19th at 162,000 KRW

[Asia Economy Reporter Kum Bo-ryeong] An analysis suggests that Amorepacific is experiencing a delay in business recovery.

According to Korea Investment & Securities on the 22nd, Amorepacific's second-quarter sales are estimated to be 1.1 trillion KRW, down 20% year-on-year, and operating profit is expected to decrease by 50% to 44 billion KRW. This is likely to fall short of the consensus estimate of 62.6 billion KRW. Domestic cosmetics sales and operating profit are expected to decline by 23% and 18% respectively, to 594 billion KRW and 62 billion KRW compared to the previous year. Overseas cosmetics sales are projected to decrease by 17% to 424 billion KRW, with an operating loss of 17 billion KRW expected. In the second quarter of last year, overseas cosmetics operating profit was 20 billion KRW.

While the Chinese market is showing gradual recovery, duty-free shops and overseas business are experiencing worsening performance. Na Eun-chae, a researcher at Korea Investment & Securities, explained, "Local sales in China are expected to decrease by 7%. The impact of COVID-19 in China is gradually easing, and thanks to the 6.18 event, the largest online shopping festival in China during the first half of the year, the rate of decline is expected to narrow significantly compared to the first quarter. Sulwhasoo and the online business are recording clear growth, but mass and offline channels are still underperforming. Consequently, duty-free and regions outside China are expected to see worsening performance."

Researcher Na added, "In the domestic business, duty-free sales are expected to decrease by 45% year-on-year. Domestic sales excluding duty-free are also expected to decline by 4%, indicating negative growth. Domestic online sales are growing rapidly by more than 50%, driven by strong direct overseas purchases, but all offline channels including department stores, Aritaum, and door-to-door sales are estimated to be in decline. Hong Kong is expected to experience a significant negative growth in the second quarter, and Southeast Asia and the Americas are inevitably facing negative growth due to the impact of COVID-19," she added.

Korea Investment & Securities has given Amorepacific a 'Buy' rating with a target price of 190,000 KRW. The closing price on the 19th was 162,000 KRW.

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