[Click eStock] "Amorepacific Expects Earnings Momentum with COSRX Acquisition... Target Price Up"

On the 1st, KB Securities raised the target price for Amorepacific from 130,000 KRW to 150,000 KRW.

Amorepacific's sales in the third quarter reached 888.8 billion KRW (consolidated basis), with an operating profit of 17.3 billion KRW. These figures represent decreases of 5% and 8%, respectively, compared to the same period last year, falling short of market expectations. In particular, the Chinese subsidiary's sales dropped by 21%, resulting in an estimated operating loss of 23 billion KRW.

Amorepacific decided to acquire an additional 53% stake in its affiliate 'Cosrx' for 755.1 billion KRW. Cosrx's performance this year showed sales of 466.7 billion KRW and operating profit of 155.4 billion KRW, surging 128% and 205%, respectively, compared to the same period last year. The shareholding ratio is expected to increase from May 2024, leading to a significant rise in Amorepacific's estimated controlling net profit for next year from 34.5 billion KRW to 55.5 billion KRW.

Shinae Park, a researcher at KB Securities, stated, "We expect that the performance in China and duty-free sales will hit bottom this year and show improvement in both scale and profitability from 2024 onward." She added, "After years of structural adjustments in the domestic business, if sales grow steadily in the future, the company is prepared for margin improvement." She continued, "The performance momentum from acquiring the Cosrx stake is also anticipated. However, considering the sustainability of explosive sales growth and the possibility of margin decline due to pursuing brand and channel diversification, it is judged that reasonable performance estimates should accompany the enthusiasm."

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