[Click eStock] "AmorePacific 1Q Performance Efficiency and Renewal Effects... Target Price Maintained"

[Asia Economy Reporter Myung-Hwan Lee] IBK Investment & Securities announced on the 29th that it maintains a Buy rating and a target price of 230,000 KRW for Amorepacific. The reason cited is the positive effects of operational efficiency and brand renewal.

Amorepacific's sales in the first quarter of this year were 1.165 trillion KRW, down 7% compared to the same period last year, and operating profit decreased by 10.3% to 158 billion KRW. Gross profit fell 11.7% year-on-year to 801.9 billion KRW, and net profit declined 12.7% to 120.1 billion KRW. IBK Securities evaluated these results as exceeding initial market expectations.

Domestic sales dropped 9.9% due to a sharp decline in duty-free store sales. Duty-free sales fell 42% compared to the same period last year. On the other hand, traditional channels centered on e-commerce saw an increase in sales per store, focusing on department stores, door-to-door sales, and Aritaum. Overseas sales decreased by 6% compared to the same period last year, despite 63% growth in the North American region, due to lockdowns in major Chinese cities and restructuring of Innisfree.

The reasons for Amorepacific's performance in the first quarter include ▲ the effect of renewed launches of major brands ▲ growth led by domestic e-commerce ▲ increased sales per store in traditional channels ▲ and efficiency in consolidated labor costs. Although uncertainty about demand in the Chinese market will continue in the second quarter, IBK Securities expects a gradual turnaround in the second half as the brand power of Sulwhasoo in China is confirmed.

Ji-Young Ahn, a researcher at IBK Securities, analyzed, "The luxury repositioning through Sulwhasoo's Jaumsaeng line is becoming visible, and profitability improvement will be materialized when the market normalizes," adding, "The decision to dispose of treasury shares worth 6.99 billion KRW is also positively judged for enhancing employee and shareholder value."

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