[Click eStock] "AmorePacific, Duty-Free Sales Increasing Mainly in Hainan... Growth Trend Expected in Second Half"

[Asia Economy Reporter Eunmo Koo] DB Financial Investment analyzed that Amorepacific is showing increased duty-free sales centered on Hainan, and Innisfree is also attempting a growth turnaround, expecting a growth trend in the second half of the year.

It is evaluated that overseas performance, including duty-free, is gradually improving. On the 16th, DB Financial Investment researcher Hyunjin Park stated in a report, “Domestic duty-free sales in the third quarter of this year are expected to remain at the previous quarter’s level, while overseas duty-free sales are increasing mainly in Hainan, China,” adding, “It is understood that four brands including Sulwhasoo and Laneige have reversed to positive growth in overseas duty-free sales from June to July due to their entry into Hainan duty-free stores.”

Researcher Park said, “They are actively engaging in marketing promotions to the extent of forming a dedicated Hainan duty-free team, so overseas duty-free demand is rapidly recovering,” and “The Chinese authorities are focusing on fostering Hainan by raising the duty-free limit to enhance the local tourism industry and duty-free competitiveness, and brands benefiting from this are being identified. Therefore, it is reasonable to say that the investment points for consumer goods companies in the second half depend on Hainan duty-free performance.”

It is also evaluated that Innisfree and Sulwhasoo are accelerating store efficiency improvements within China to reduce fixed cost burdens. Researcher Park said, “Around 100 Innisfree stores are expected to be closed by the end of the year, and the pace of entry into online channels or multi-brand stores will accelerate compared to now,” adding, “Growth is expected with a structure that strengthens local-exclusive product lines and raises the average selling price, and the point at which online sales of the two brands exceed 40% of total sales and surpass offline sales is approaching.”

Furthermore, with the fourth quarter Chinese online shopping events, online sales growth is expected to strengthen, and Innisfree’s sales in China are projected to return to positive growth. Researcher Park evaluated, “Attempts to secure growth engines through mergers and acquisitions (M&A) or equity investments, in addition to organic growth, are positive.”

Performance is expected to recover in the second half of the year, centered on overseas duty-free and online sales. Researcher Park said, “Although not fast, the direction is assumed to be an upward trend, so I maintain a buy rating,” and added, “I expect a cycle where growth momentum is amplified in conjunction with the awareness of structural changes and the return to normal daily life.”

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