[This Week's Industry Insight] APR, the Game-Changer in Beauty Devices Expanding Overseas

Beauty Device Brand 'AgeR'
8-Year Average Annual Sales Growth Rate of 157%
Strong in Size Growth, Profitability, and Stability
High Overseas Sales Ratio and Diverse Sales Countries
Lock-up Release Scheduled for March and April Poses a Burden

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A game changer has emerged in the beauty industry. It is APR, which recently debuted on the Korea Composite Stock Price Index (KOSPI) through an initial public offering (IPO). APR is a beauty tech company founded in 2014 by CEO Kim Byung-hoon. It has grown rapidly around two pillars: ‘home beauty devices’ and ‘cosmetics.’ Currently, it owns beauty brands such as Mediheal, Aprilskin, Forment, and Glamdiva Bio, as well as fashion brand NERDY and instant photo booth brand Photogray. Although it attracted market attention as the first ‘major’ newly listed company this year, it failed to meet market expectations on its first day of listing. Despite sluggish stock performance since listing, it still enjoys trust as the leading company in the beauty sector.

Annual average sales growth rate of 157%... 'AGE-R' captures both functionality and price

Looking at APR’s performance over the past three years, sales steadily increased from KRW 259.1 billion in 2021 to KRW 397.7 billion in 2022, and a provisional KRW 523.8 billion in 2023. Operating profit also rose during the same period, recording KRW 14.3 billion, KRW 39.2 billion, and KRW 104.2 billion, respectively.

Since its founding, the compound annual growth rate (CAGR) of sales from 2014 to 2022 reached an impressive 157%. Based on last year’s performance, cumulative sales for the first three quarters of 2023 were KRW 371.8 billion, a 38% increase year-on-year, while operating profit surged 278% to KRW 69.8 billion. During the same period, the operating margin was 19%, and the debt ratio was 47%, indicating that the company has achieved not only scale growth but also profitability and stability.

Driving APR’s growth is the home beauty device ‘AGE-R.’ Since its launch in 2021, AGE-R’s cumulative domestic and international sales reached 1.68 million units by December 2023, just two years after release.

The home beauty device market was previously dominated by high-priced products from companies like LG Electronics, Zion Meditech, Hylogic, and Pharma Research. Consumers demanded higher performance than cosmetics but were reluctant to pay high prices, making it difficult to find strong appeal. AGE-R secured a differentiated position by combining excellent performance with price competitiveness. The first-generation product, Booster Healer, was priced in the KRW 200,000 range, lower than competing products, allowing it to quickly establish itself in the market. The second-generation new product, Booster Pro, is priced around KRW 300,000 at retail. When trading in existing products, the price attractiveness remains in the KRW 200,000 range. As a result, it has secured over 30% market share in the domestic home beauty device market.

Notably, each of APR’s brands is recognized not just for specific products but as the ‘brand’ itself. This is a testament to high brand awareness. Naturally, repurchase rates are also significant. This positively impacts APR’s cosmetics business as well. APR’s cosmetics and beauty devices have a high synergy effect. This strong synergy builds customer trust in the products, which in turn leads to a virtuous cycle of repurchases.

Diverse overseas sales in the US, China, Japan... Exploring direct entry into Europe and Southeast Asia

Another key factor in APR’s success is its stable global distribution network built independently. This has diversified its overseas sales. As of the third quarter of 2023, overseas sales accounted for 37% of total sales. Specifically, sales distribution by country is balanced with the US at 27%, China at 20%, and Japan at 18%.

This is seen as the fruition of CEO Kim’s ‘global beauty tech company’ strategy emphasized since the company’s inception. APR actively expanded overseas sales channels starting with China, Japan, and Singapore in 2017, Hong Kong in 2018, and the US in 2019.

In overseas markets, APR has expanded its loyal customer base primarily through online direct-to-consumer malls, which were successful domestically, while simultaneously utilizing familiar local platforms such as Amazon to strengthen brand fandom. Increased fandom is said to contribute to higher repurchase rates.

APR is also continuously building a rich database that can be used for product development and marketing. The company is exploring direct entry into Europe and Southeast Asia. Alongside this, it is focusing on indirect channel development through overseas distributor contracts. This explains its active participation in international exhibitions such as the Consumer Electronics Show (CES) and the beauty expo COSMOPROF.

Expanding second factory in Pyeongtaek... Securing large-scale production capacity

APR is currently preparing a second factory in Pyeongtaek, Gyeonggi Province, to secure production capacity for new beauty device lineups. It is expected to have a production scale 4 to 5 times larger than the first factory. The daily production capacity per line is 5,000 units. By 2025, the annual maximum production volume for the Booster Pro product is expected to reach 8 million units.

Earlier, in January 2023, APR opened the ADC, a specialized research and development (R&D) center for beauty devices. The company plans to continue launching innovative beauty devices applying its proprietary technology. Going forward, APR aims to maintain a super-gap position in the beauty device market through securing unique technological competitiveness and internalizing the value chain.

[Image source=Yonhap News]

However, the stock price has not met expectations. On the first day of listing, it failed to achieve the ‘double-double’ (a fourfold increase over the IPO price) that investors hoped for, and the stock price trend has not been favorable since. APR closed trading on the listing day at KRW 317,500, up KRW 67,500 (27%) from the IPO price of KRW 250,000. Since then, the stock price has declined, reaching KRW 299,500 on the 4th.

A stock price rebound does not seem easy. According to the Korea Securities Depository, 11.53% of APR’s shares will be released from lock-up in March alone, with another 11.68% scheduled for April. This overhang (potential sell-off volume) issue is expected to increase stock price volatility.