"Wanting to Look Beautiful Even Amid War" Increase Allocation in K-Beauty Stocks [Weekend Money]

Despite the aftermath of war, the so-called K-beauty trend, including Korean cosmetics, remains as popular as ever, according to analysts in the securities industry. It is being suggested that investment allocations in cosmetics stocks such as APR, Silicontwo, and COSMAX should be increased.

According to Korea Investment & Securities on April 25, Korean cosmetics exports from the beginning of the year through April 20 grew by 20.7% compared to the same period last year, contributing to the recovery of investment sentiment in the cosmetics sector.

Kim Myungjoo, a researcher at Korea Investment & Securities, stated in the report "Investment Ideas Check: K-Beauty Popularity Unchanged Despite the War" that "contrary to market concerns, the trend in Korean cosmetics exports remains solid." She added, "Exports to the United States have been robust, and exports to Europe have been explosive. Considering events such as Amazon Prime Day in the U.S. in June, exports of cosmetics are expected to maintain a strong trend in May as well."

Yonhap News Agency

She continued, "The first-quarter earnings of major cosmetics companies are also expected to meet market expectations," and forecasted that "the strong stock performance of the cosmetics sector will continue." In the case of APR, a representative beneficiary of K-beauty, a large-scale earnings surprise like last year may be difficult in the first quarter of this year, but strong sales in Europe are anticipated. If sales in Europe are better than expected, there is a possibility that annual performance estimates could be revised upward.

Kim pointed out, "Since the second half of last year, some cosmetics companies have posted results that fell short of market expectations, and concerns about a slowdown in the global popularity of Korean cosmetics have not disappeared." However, she dismissed such worries, saying, "Given that Korean cosmetics currently account for about 3% market share in their primary target markets—the U.S. and Europe—it is far too early to discuss a peak-out." She also referenced the past, when the market share of Korean cosmetics in China once rose to the 10% range, and emphasized, "It is entirely possible for the popularity of Korean cosmetics to rise further in major countries."

Kim added, "Since APR is achieving overwhelming results in both the U.S. and Europe, there is still room for an additional valuation increase, so a strategy to expand allocations in APR remains valid." She further recommended distinguishing one’s portfolio through Silicontwo and COSMAX. "Currently, Silicontwo's valuation is attractive even by traditional distributor standards," she explained, "and contrary to market expectations, China's macro indicators are solid. As expectations for a recovery in the Chinese economy grow, COSMAX, which has a Chinese subsidiary, is likely to attract market attention."

The target prices for APR, Silicontwo, and COSMAX suggested by Korea Investment & Securities are 500,000 won, 60,000 won, and 270,000 won, respectively.

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