[Click eStock] "Aekyung Industrial, Focus on Cosmetics Growth... Target Price Maintained"

Sangsangin Securities maintained a buy rating and a target price of 30,000 KRW on the 28th for Aekyung Industrial, stating that "the aggressive expansion of cosmetics is expected to act as a driving force for stock price increase." The previous day's closing price was 16,410 KRW.

On the same day, researcher Kim Hyemi of Sangsangin Securities said, "Aekyung Industrial's consolidated results for the first quarter of this year are expected to exceed market expectations with sales of 170.5 billion KRW and operating profit of 17.1 billion KRW."

The cosmetics division is expected to see sales increase by 13.5% and operating profit by 15.3% compared to the same period last year. By channel, sales continue to grow in online and H&B (Health & Beauty) growth channels, while home shopping is showing visible profitability expansion through efficiency improvement. Researcher Kim said, "Exports, which account for 70% of the division's sales, recorded a favorable trend with sales during the first quarter event (March 8, Women's Day) in the main region, China, increasing by more than 20% compared to the same period last year," adding, "Continuous growth is also being observed in Vietnam, Japan, and the United States."

Household goods are expected to grow sales by 5.6% and operating profit by 4.1%. Researcher Kim noted, "Similar to cosmetics, operations are focused on growth channels, with concentrated nurturing of digital and new growth channels. Among them, offline sales are benefiting from expanded sales in Daiso and warehouse discount stores," adding, "Exports are generally maintaining growth trends, and the restructuring of China, which experienced negative growth last year, has been completed, so sequential recovery is expected from this year." The continuous expansion of the premium line's share is also expected to contribute to maintaining the significantly improved profitability from the previous year.

Researcher Kim said, "If household goods led the performance last year, cosmetics will lead this year," explaining, "Domestically, this is due to efficiency improvements in existing channels and expansion focused on growth channels, while overseas, both China and non-China markets are responding with the use of local major models and the launch of exclusive products." In Japan, aggressive offline store openings are planned this year (from 3,800 stores at the end of February to 5,000 by year-end), and in the United States, online expansion through major vendors is planned, which is expected to drive performance growth throughout the year.

Furthermore, Researcher Kim said, "Efforts to enhance shareholder value, such as increasing dividends per share (DPS) and share buybacks, which are relatively superior within the industry, are also positive," adding, "The current stock price is excessively undervalued. Considering a reasonable price-to-earnings ratio (PER) of 15 times for the target price, stable profitability, overseas proportion, and growth potential, this level is sufficiently applicable."