[Click eStock] "Amorepacific, Expecting Expansion of COSRX and Western Markets... New Target Price Set at 170,000 KRW"

North America Region Sees Continued Growth of Laneige and Innisfree
Concerns Arise from Losses in China Subsidiary
Expansion in North American Market and Restructuring in China Drive Stock Performance

Daishin Securities on the 24th newly issued a 'Buy' investment rating and a target price of 170,000 KRW for Amorepacific. The target price was calculated by applying a forward 12-month earnings per share (EPS) of 6,181 KRW and a price-to-earnings ratio (PER) of 28 times, which is the average PER of global cosmetics competitors. Amorepacific's closing price on the previous trading day was 124,300 KRW.

Hansol Jeong, a researcher at Daishin Securities, said, "The company is pursuing a global rebalancing strategy by reducing its share in the Chinese market and expanding sales in North America and the EMEA (Europe, Middle East, Africa) regions." He added, "In particular, in North America, the growth of the Laneige, Innisfree, and COSRX brands continues, and in the EMEA region, the company is actively entering the UK market and expanding its distribution network."

According to Daishin Securities, the deterioration of the Chinese subsidiary's performance is a major concern for Amorepacific. One-time costs caused by changes in transaction structures and the reduction of offline stores are sustaining losses, and sales are also shrinking. However, it is expected that the scale of losses will decrease once restructuring is completed.

Sales for the third quarter of 2024 are expected to increase by 9% year-on-year to 966.3 billion KRW, and operating profit is expected to increase by 128% to 39.3 billion KRW. However, excluding COSRX, operating profit is projected to decline due to losses from the Chinese subsidiary. The domestic duty-free channel is expected to maintain sales and margins similar to the previous quarter, but the traditional channel faces concerns of negative growth due to weakened consumption. Meanwhile, in Western markets such as the US and Europe, steady sales growth centered on Laneige and Innisfree is anticipated.

Researcher Jeong said, "The current stock price is highly volatile due to mixed expectations for COSRX and the expansion of its own brands' sales in Western markets and concerns about Chinese performance." He added, "For stable stock price growth, the expansion of COSRX's offline presence in North America and visible performance improvements after the completion of restructuring in China need to be realized."

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