[Click eStock] "AmorePacific, Target Price Raised from 200,000 to 220,000 Won"

On the 30th, Korea Investment & Securities raised the target price of Amorepacific from 200,000 KRW to 220,000 KRW and maintained a buy rating.

Amorepacific recorded sales of 911.5 billion KRW and an operating profit of 72.7 billion KRW in the first quarter. The operating profit significantly exceeded market expectations because the overseas subsidiaries posted an operating profit of 31.6 billion KRW, greatly surpassing expectations. In the first quarter, Amorepacific launched a new Laneige product in the United States, and wholesale sales increased significantly, resulting in very strong sales in the U.S. However, since wholesale sales were heavily reflected in the first quarter, it is inevitable that the sales growth rate of the U.S. subsidiary will slow down in the second quarter.

The operating loss of the Chinese subsidiary in the first quarter was estimated to be about 9.2 billion KRW. Although Chinese sales were weaker than market expectations, the smaller-than-expected loss was due to reduced promotional expenses by Amorepacific in China, thanks to the recovery of Chinese consumers' demand for cosmetics. The demand recovery from the reduction of cosmetic inventory held by Chinese consumers is expected to continue into the second quarter. Accordingly, the operating loss of the Chinese subsidiary in the second quarter is expected to be slightly lower than previously estimated, at around 14 billion KRW. The increase in operating loss in the second quarter compared to the first quarter is expected due to increased marketing expenses related to strengthening the Sulwhasoo Jinsul lineup and responding to the 618 shopping festival.

Researchers Kim Myung-joo and Jeon Ye-won stated, "Korean cosmetics, which offer high cost-effectiveness and have strengths in the skincare category, are expected to maintain high popularity in the U.S. cosmetics market going forward." The rising popularity of Korean cosmetics not only in the U.S. but also in countries such as Indonesia and Malaysia presents new opportunities for Amorepacific. Over the past month, sentiment in the cosmetics sector has improved, leading to a sharp rise in Amorepacific's stock price. Nevertheless, the unexpected recovery of the Chinese subsidiary's performance and the strong sales trends of the U.S. business and COSRX have once again been highlighted, and Amorepacific is expected to continue its favorable stock price trend.