[Click eStock] "AmorePacific, Q1 Earnings Surprise... Target Price Up 18%"

Q1 Operating Profit 72.7 Billion KRW, Strong Performance in Western Markets
High Growth Driven by Channel and Regional Diversification
COSRX Scheduled for Subsidiary Incorporation in May

Meritz Securities recommended an aggressive buy approach for Amorepacific on the 30th, stating that the company is pursuing high growth through channel diversification and regional expansion. The investment opinion 'Buy' was maintained, and the target price was raised from the previous 165,000 KRW to 195,000 KRW. Amorepacific's closing price on the previous trading day was 155,900 KRW.

Hanuri, a researcher at Meritz Securities, said, "The company is naturally growing through channel diversification (strengthening online and MBS) and regional diversification (expanding new growth areas such as Western countries and the Middle East)." He added, "The subsidiary (COSRX) is aiming for high growth through product additions and offline expansion." COSRX is scheduled to be included in May. COSRX's first-quarter sales were 156.3 billion KRW, and its contribution to consolidated operating profit is expected to reach 38% in 2024 and 49% in 2025. Researcher Han said, "As a top large-cap favorite stock, we recommend an aggressive buy approach," calling it "The return of the king."

Amorepacific posted first-quarter 2024 sales of 911.5 billion KRW and operating profit of 72.7 billion KRW. The first-quarter equity-method profit from COSRX was 16.3 billion KRW in sales and 9.3 billion KRW in operating profit.

Specifically, domestic cosmetics sales and operating profit reached 468.5 billion KRW and 47.4 billion KRW, respectively. The normalization of duty-free sales (+42.5%), expansion of H&B (+27.6%) base, and the establishment of online direct and indirect channels drove profitability improvements. Overseas, the deficit in China was 8.2 billion KRW, less than the expected 20 billion KRW, due to inventory adjustments for wholesale channels and store closures. Notably, performance in Western regions was strong. Both North America (+39.8%) and Europe (+51.2%) maintained a strong trend, supported by the success of Laneige's new products and the expansion of Innisfree's touchpoints.