[Click eStock] "Growth Slows Due to Health Supplement Competition"... Nutri, Target Price Down

[Asia Economy Reporter Ji Yeon-jin] SangSangIn Securities announced on the 22nd that it has lowered the target price for Nutrie to 34,000 KRW, citing that the growth of collagen-based dry beauty products is slowing down more than initially expected. This is based on applying an appropriate price-earnings ratio (PER) of 12 times to the estimated net profit for next year.

Researcher Ha Tae-gi of Yuanta Securities said, "Reflecting the decline in the growth rate of collagen products, we lowered the appropriate PER from 13 times to 12 times," adding, "The stock price has been on a downward trend in the second half of this year, and whether collagen cosmetics will grow next year will become a variable for stock price momentum."

Nutrie's third-quarter sales increased by 29.6% year-on-year to 58.6 billion KRW, while operating profit decreased by 48.8% to 3.1 billion KRW. Compared to the second quarter of this year, sales decreased by 7.1%, and operating profit fell by 50.8%. These figures are below market expectations (sales of 62.1 billion KRW, operating profit of 6.2 billion KRW). The decline in operating profit was significantly below expectations even considering the costs of the golf tournament held in July. Both EverCollagen and probiotics fell short of expectations.

Most domestic brands' dry products have shown stagnant performance in the second and third quarters this year due to intensified competition among companies. While sales growth has stalled, home shopping commissions have also increased, significantly reducing the profitability of the health functional food business, which relies heavily on home shopping. Nutrie is not significantly different from this trend.

However, the potential of collagen cosmetics is evaluated as a variable for future growth. Last month, the company launched a functional cosmetic product (CTP Ampoule) that concentrates EverCollagen raw material by 5 times. Researcher Ha said, "Cosmetics is a highly competitive business," and added, "It will be a checkpoint to see whether the company can expand its cosmetics line and succeed in marketing and sales like EverCollagen in the future."