[Click eStock] "AmorePacific, Delayed Recovery in China & Sulwhasoo Rebranding... A Time of Waiting"

Kiwoom Securities maintained a 'Buy' rating on Amorepacific on the 23rd, setting a target price of 165,000 KRW.

Amorepacific's second-quarter sales are expected to be 967.8 billion KRW, with an operating profit of 38.3 billion KRW, falling short of market expectations. This is due to limited sales growth caused by delayed recovery in the China channel and the reflection of rebranding costs for Sulwhasoo.

Domestic cosmetics sales are projected to reach 484.8 billion KRW. The domestic cosmetics business is expected to see a decline in sales to China. Online channels are anticipated to experience a decrease in direct overseas sales due to the delayed recovery of the Chinese cosmetics market. Meanwhile, the duty-free channel is expected to recover slowly as sales of some product lines are restricted. Duty-free channel sales are forecasted to decline by 24%, and online channel sales by 13%.

Overseas sales are expected to reach 391.5 billion KRW. The China region is projected to record double-digit growth due to a low base effect, and non-China regions are also expected to maintain steady growth. By region, China is expected to increase by 38%, other Asia by 12%, and North America by 77%.

Sojeong Cho, a researcher at Kiwoom Securities, analyzed, “The Chinese cosmetics market is expected to gradually normalize in the second half of the year, but the pace is likely to fall short of previous expectations. Amorepacific plans to continue steady investment related to Sulwhasoo rebranding for the time being, so short-term profitability improvement is expected to be limited. However, market interest in the recovery trend of the Chinese market’s economy and demand, as well as the results of Sulwhasoo rebranding investment, is expected to expand in the future.”

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