[Click eStock] "Amorepacific, Target Price Cut by 20%"

High Dependence on China and Intensified Competition... Despite Growth in High-Priced Products, Performance Deteriorates
NH Investment & Securities Lowers Amorepacific Target Price from 250,000 KRW to 200,000 KRW

[Asia Economy Reporter Gong Byung-sun] NH Investment & Securities has downgraded the target price of Amorepacific. This is interpreted as being influenced by sluggish performance in the Chinese market.

On the 13th, NH Investment & Securities maintained its investment opinion of 'Buy' for Amorepacific but lowered the target price by 20% from the previous 250,000 KRW to 200,000 KRW. The closing price on the previous day was 155,000 KRW.

The high dependence on China and intensified competition are expected to negatively impact earnings. NH Investment & Securities estimated Amorepacific's overseas subsidiaries' sales in Q4 last year to be 510 billion KRW, down 6% year-on-year, and operating profit to be 14.9 billion KRW, down 71.5% during the same period. In particular, it is observed that sales of Innisfree within the Chinese subsidiary's revenue dropped by more than 50% compared to the same period last year.

However, the growth of high-priced products is expected to somewhat offset the overseas segment's sluggishness. The premium cosmetics brand 'Sulwhasoo' is expected to establish its position as a premium product by focusing on the Jaumsaeng and Jinsul lines this year.

Jomi-jin, a researcher at NH Investment & Securities, explained, "As early as the end of this year, there are plans to launch brands with higher price points than Sulwhasoo in China," adding, "Through this, it is expected to build a diverse brand portfolio in the premium market."

Meanwhile, NH Investment & Securities estimated Amorepacific's Q4 sales last year to be 1.2059 trillion KRW, up 4.2% year-on-year, and operating profit to have turned positive to 43.8 billion KRW during the same period. These figures are 2.18% and 19.49% below the respective market consensus.