[Click eStock] "Amorepacific, Expected to Pass Q4 Bottom... Target Price Maintained"

[Asia Economy Reporter Oh Ju-yeon] Daishin Securities analyzed on the 7th that Amorepacific's operating profit in the fourth quarter of 2020 is expected to record the first quarterly loss, passing the final bottom. Accordingly, it maintained the investment opinion 'Buy' and the target stock price of 240,000 KRW.

According to Daishin Securities, Amorepacific's consolidated sales in the fourth quarter of 2020 are expected to decrease by 11% year-on-year to 1.187 trillion KRW, and operating loss is expected to turn to a loss of 1.8 billion KRW, falling short of market consensus.

In Korea, due to the impact of the novel coronavirus infection (COVID-19), offline channel traffic continued to decline, making it inevitable for traditional channel sales such as department stores and discount stores to decrease.

However, Daishin Securities diagnosed that unlike the third quarter, Amorepacific's duty-free shop sales in the fourth quarter decreased by 26% year-on-year, performing better than the market.

In the Asia region, during China's largest consumption event, Singles' Day, Sulwhasoo's transaction amount grew by 174%, compensating for Innisfree's offline sluggishness, and China's sales are estimated to have grown by 3% year-on-year.

Despite the better-than-expected performance in Korea and China, which account for more than 80% of sales, a quarterly loss is expected for the first time since listing due to the reflection of high severance costs related to voluntary retirement.

However, this year, it is expected to pass the bottom through differentiated strategies by brand. The promising market is China. China's sales are expected to grow by 4% this year. The size of the Chinese live commerce market in 2021 is expected to reach 1.2012 trillion yuan, with an average annual growth rate of 129% since 2017. Therefore, premium and mass brands are expected to actively utilize live commerce channels to offset offline sluggishness, secure young customers, and renew brand images.

Han Yoo-jung, a researcher at Daishin Securities, added, "Along with this, Sulwhasoo's average selling price (ASP) centered on the Jaumsaeng line is expected to rise."

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