[Click eStock] AmorePacific, a Breather in Q3... Target Price Down 13%

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating on Amorepacific on the 15th and set the target price at 280,000 KRW, down 13% from the previous trading day. This decision was based on the continued sluggishness in the Chinese market and the need to monitor the restructuring situation of Innisfree.

Amorepacific's third-quarter sales are expected to decline by 3% from the previous quarter to 1.1412 trillion KRW, and operating profit is forecasted to decrease by 8% to 83.5 billion KRW. Daishin Securities has revised down its operating profit estimate from the previous forecast of 122.1 billion KRW.

The downward revision in earnings estimates appears to be largely due to weakness in the Chinese market. Yoojeong Han, a researcher at Daishin Securities, stated, "Third-quarter Sulwhasoo sales in China are estimated to have grown steadily by 35% year-on-year, but Innisfree's offline and online sales in China fell by 74% and 15%, respectively, compared to the same period last year, indicating a worsening performance compared to the second quarter. The main cause is the weakening competitiveness within the masstige (mid-range) brand segment."

Domestic duty-free channel sales are expected to increase by 10% year-on-year, while overseas duty-free channel sales are estimated to grow by 39%, influenced by the high growth base in Hainan since July last year. Despite the slowdown in market growth, digital channel sales grew by 32% year-on-year, maintaining the growth pace seen in the first half of the year.

To improve store efficiency, the number of Innisfree stores in China is planned to be reduced to 300 by the end of this year and to 200 by the end of 2022. Researcher Yoojeong Han said, "The offline sales proportion of Innisfree in China is expected to shrink to 41% this year and 31% next year. The key issue is whether sales can be defended through online channels amid continuous store closures."

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