[Click eStock] "AmorePacific, 2Q Recovery Visible... Top Preferred Stock in Cosmetics"

[Asia Economy Reporter Kwon Jae-hee] Kiwoom Securities maintained a 'Buy' rating and a target price of 240,000 KRW for Amorepacific on the 6th.

Although a decline in performance is expected due to the Chinese government's strengthened quarantine policies, recovery signals are anticipated starting from the second quarter of this year.

Kiwoom Securities projected Amorepacific's operating profit for the first quarter of this year at 114.9 billion KRW, representing a 35% decrease compared to the previous year.

This performance is attributed to sluggish sales in duty-free channels and the Chinese subsidiary caused by the strengthened quarantine measures in China. Additionally, the renewal of the Sulwhasoo Jaumsaeng line in the latter part of the first quarter likely prevented the product line's full potential from being realized.

Despite the deteriorated market environment, a visible recovery in performance is expected from the second quarter, becoming more pronounced toward the end of the year.

Sojeong Cho, a researcher at Kiwoom Securities, analyzed, "Amorepacific is expected to grow centered on domestic and international online channels from the second quarter. The expansion strategy of online channels and the impact of China's 6.18 shopping festival are expected to drive high growth in online channels."

Kiwoom Securities noted that while short-term volatility should be monitored, Amorepacific remains the top preferred stock in the cosmetics industry in terms of brand value.

Researcher Cho concluded, "Although there is a possibility of increased short-term volatility due to COVID-19 risks originating from China, considering Amorepacific's brand value, luxury brand development capabilities, marketing competencies, and online channel expansion strategy, its competitiveness within the cosmetics industry remains excellent in the long term."