[Click eStock] "Amorepacific, Strong Non-China Momentum... Buy on Price Correction"

Target Price Maintained at 1.65 Million Won

On the 8th, Korea Investment & Securities stated that it recommends a buying strategy for Amorepacific during stock price corrections due to the still solid non-China momentum. The target price was maintained at 1.65 million KRW.

Myungjoo Kim, a researcher at Korea Investment & Securities, said, "Even if the global economy recovers slowly, Korean indie cosmetics with strong price competitiveness and Amorepacific's masstige brands are judged to be able to maintain their current high popularity," adding, "We expect Amorepacific's stock price to remain sideways in the short term due to weak fourth-quarter earnings. However, since the non-China momentum remains solid, we recommend a buying strategy during stock price corrections."

Korea Investment & Securities forecasted that Amorepacific's consolidated sales for the fourth quarter of last year would be 982.7 billion KRW, and operating profit would be 26.2 billion KRW, which are expected to fall short of market expectations by 3.8% and 31.5%, respectively. The reasons for the weak performance are larger-than-expected losses in the China business and poor sales in the duty-free channel. Additionally, the operating loss of the China subsidiary in the fourth quarter is expected to be 24.6 billion KRW, similar to the third quarter.

Researcher Kim predicted that Amorepacific's business in China would remain sluggish until the first quarter of this year. He said, "Considering the slow economic recovery in China, we expect Amorepacific's weak China business to continue until the first quarter of 2024," and estimated the operating loss in the China business for the first quarter to be around 10 to 12 billion KRW.

However, he believes that this sluggishness in the China business has been sufficiently reflected in the recent stock price correction. He also expects the non-China momentum, centered on North America, to support the downside of Amorepacific's stock price. Researcher Kim analyzed, "Based on our 2024 estimates, the non-China portion of Amorepacific's total sales is expected to be 32.1%, and the North America portion is expected to be 13.9%."

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