[Weekly HOT Stocks] Amorepacific's Stock Price Fluctuates... Foreigners' Net Buying Increases

On the 20th, Amorepacific's closing price was 197,000 KRW... a 12.57% increase over 5 trading days

[Asia Economy Reporter Geum Bo-ryeong] Amorepacific's stock price fluctuated over the week, attracting significant attention from foreign investors.

According to the Korea Exchange on the 22nd, Amorepacific's closing price on the 20th was 197,000 KRW. The closing price, which was 175,000 KRW on the 13th, rose by 12.57% over five trading days. The closing prices were 174,500 KRW on the 16th, 185,000 KRW on the 17th, 188,000 KRW on the 18th, and 188,000 KRW on the 19th.

Foreign investors focused on Amorepacific. From the 16th to the 20th, foreign investors net purchased Amorepacific shares worth 162.1 billion KRW. Amorepacific ranked 4th among the top stocks by net foreign investor purchases during this period.

Park Eun-jung, a researcher at Yuanta Securities, analyzed, "In terms of sales, growth rates in China and duty-free are recovering, and in terms of margin, the mix is improving due to an increase in the luxury segment and a decrease in offline proportion in China." She added, "With expectations that 2021 will be the first year when the Sulwhasoo brand makes its largest contribution in China, we anticipate a rise in gross profit margin (GPM) and a recovery in China's margin rate due to fixed cost reductions from Innisfree store closures."

Park Jong-dae, a researcher at Hana Financial Investment, explained, "As the cosmetics market moves toward online and venture eras, Amorepacific, which has a relatively large offline and mid-to-low price sales proportion, has suffered significant damage. While its annual operating profit once reached 850 billion KRW, this year's annual operating profit is expected to fall short of 200 billion KRW." He continued, "Unlike LG Household & Health Care, Amorepacific's cosmetics sales proportion is absolute, and the profit share from duty-free in cosmetics is overwhelmingly high. Therefore, if the duty-free channel shrinks by 40% compared to the previous year, it is difficult to expect performance improvement. Hence, if Sulwhasoo sales in China in Q4 continue to grow by more than 20% year-on-year and duty-free sales decline by less than 20% compared to the previous year, a gradual stock price recovery can be expected for the time being."