[Click eStock] "Amorepacific, Decline in Chinese Demand Due to COVID-19 Spread"…Target Price ↓

[Asia Economy Reporter Lee Jung-yoon] Daishin Securities downgraded its target price for Amorepacific from 190,000 KRW to 160,000 KRW on the 31st, citing a downward revision in estimates for the duty-free segment and the Chinese subsidiary's performance due to the resurgence of COVID-19 in China. However, the investment rating was maintained at Marketperform.

Amorepacific's consolidated sales for the first quarter of this year are expected to increase by 3% year-on-year to 1.2909 trillion KRW, while operating profit is forecasted to decrease by 30% to 122.7 billion KRW. Han Yoo-jung, a researcher at Daishin Securities, stated, "Digital channel sales are expected to continue strong growth despite the high base effect from last year's quarterly high growth rates, with a 21% increase year-on-year," adding, "Domestic duty-free sales in January and February this year were sluggish, and March sales remained at last year's level, resulting in a 13% year-on-year decline in first-quarter domestic duty-free sales, which is expected to fall short of previous estimates."

She continued, "Sales in local currency terms at the Chinese subsidiary are estimated to decrease by 9% year-on-year," and added, "Due to the decline in sales in China, the operating profit margin in the Asia region is expected to deteriorate to 3%, making profitability worse compared to last year."

The researcher also explained, "Strict COVID-19 prevention policies in China have led to lockdowns in major cities, causing unavoidable logistics disruptions, which are expected to result in setbacks in both online and offline sales," and noted, "Unexpected external variables are also expanding uncertainty in the domestic duty-free channel."

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