[Click eStock] "Amorepacific Shrinks in Q2, the Issue is 'Sulwhasoo'"

[Asia Economy Reporter Oh Ju-yeon] Meritz Securities evaluated that Amorepacific's performance in the second quarter of this year recorded the largest decline since its establishment, analyzing that the performance of 'Sulwhasoo' was insufficient.

According to Meritz Securities on the 3rd, Amorepacific's sales in the second quarter of this year decreased by 24.2% year-on-year to 1.0557 trillion KRW, and operating profit fell by 59.9% to 35.2 billion KRW. Net profit recorded 11 billion KRW, down 81.9% year-on-year. Meritz Securities diagnosed that these results generally met market expectations, but net profit was about 49.8% below expectations.

By region, domestic cosmetics sales and operating profit decreased by 31.1% and 40.5% year-on-year to 531.4 billion KRW and 45.2 billion KRW, respectively, with the exception of online sales which increased by 60.0% year-on-year, all other areas sharply declined.

Both duty-free and non-duty-free sales decreased by 44.8% and 48.6% year-on-year, respectively, and the luxury and premium segments also fell by 33.4% and 28.1% year-on-year, respectively.

The overseas market also showed poor performance. The Chinese market still recorded a decline, with Amorepacific's sales in China decreasing by 12.4% year-on-year, and even the high-end brand 'Sulwhasoo' showed a single-digit growth rate of 6.5% year-on-year. Operating profit was at the breakeven level, avoiding losses.

Researcher Hanuri pointed out, "The real problem is the insufficient performance of Sulwhasoo." Han said, "Despite being 'luxury' based on inelastic demand, it is underperforming market growth," adding, "A reconsideration of content competitiveness is necessary. A conservative approach is recommended."

Accordingly, the investment opinion on Amorepacific remains 'Buy,' but the target price was lowered by 5% from the previous to 200,000 KRW.

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