[Click eStock] "AmorePacific Likely to Underperform Market Growth in Q2"

[Asia Economy Reporter Oh Ju-yeon] Meritz Securities maintained its 'Buy' rating and target price of 210,000 KRW for Amorepacific on the 3rd, analyzing that the short-term earnings visibility is relatively inferior.

According to Meritz Securities, Amorepacific's second-quarter sales are expected to be 1.1024 trillion KRW, and operating profit 34.2 billion KRW, down 20.9% and 61.1% respectively compared to the same period last year. Net profit is also projected to decrease by 63.9% to 21.9 billion KRW.

Researcher Hanuri explained, "The occurrence of negative leverage is inevitable," adding, "This is due to sluggish sales in high-margin channels (duty-free shops) and increased fixed cost burdens in overseas subsidiaries (China, Hong Kong, Japan)."

For domestic cosmetics, sales and operating profit are estimated at 581.6 billion KRW (-24.6% YoY) and 49.2 billion KRW (-35.3%), respectively. Except for online (65.0%), all channels are expected to contract: duty-free -45.0%, door-to-door sales -21.5%, department stores -19.3%, and specialty stores -44.6%. However, daily necessities are expected to remain similar to the previous year.

Overseas, China’s expected sales and operating profit are 271 billion KRW (-14.2%) and 6.2 billion KRW (-75.5%), respectively. Hong Kong and Japan are also struggling, with other Asian sales projected at 118.2 billion KRW (-30.4%) and operating losses of 12.9 billion KRW.

Researcher Han said, "Both pillars of performance, duty-free and China, are shaking," and added, "Without factors that can practically improve the business environment, such as lifting self-quarantine, it is judged difficult to switch to an upward trend in the short term, and a conservative approach is recommended."

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