APR Shares Dragged Down by Q2 Earnings Concerns

Stock Prices Rising from May to June Drop 27% This Month
Reflecting Q2 Earnings Concerns... Market Expectations Likely Unmet
Overseas Sentiment Reversal Expected in Second Half of Year

The stock price of APR, which has been implementing various shareholder return policies to enhance shareholder value, has been sluggish this month. Concerns over weak second-quarter earnings this year are leading to a decline in investor sentiment.

According to the financial investment industry on the 17th, APR's stock price has fallen 26.8% since the beginning of this month. Net selling by institutional investors appears to have influenced the stock price decline. The cumulative net selling by institutions this month reached 317,000 shares, amounting to over 100 billion KRW.

Hyundai Motor Securities estimated that APR recorded sales of 157.8 billion KRW and operating profit of 27 billion KRW in the second quarter of this year. Compared to the same period last year, sales increased by 6.0%, while operating profit decreased by 2.7%. Minjung Kwak, a researcher at Hyundai Motor Securities, explained, "Sales of the fashion division 'Nerdy' declined, and marketing expenses for the beauty device segment were likely reflected."

Established in October 2014, APR was listed on the KOSPI market on February 27 this year with an initial public offering price of 250,000 KRW. It is a manufacturer of cosmetics and beauty devices. The company operates beauty brands such as 'MediCube,' 'AprilSkin,' 'Forment,' and 'GlamD Bio.' MediCube AGE-R is a home-use beauty device that recorded cumulative sales of 1.68 million units until last year. In the first quarter of this year, it posted sales of 148.9 billion KRW and operating profit of 27.8 billion KRW, increases of 21.9% and 19.7%, respectively, compared to the same period last year. Overseas sales drove this growth.

When the strong first-quarter performance was achieved, expectations for the second-quarter results were high. At that time, Eugene Investment & Securities estimated that APR would record sales of 172.1 billion KRW and operating profit of 32.1 billion KRW in the second quarter, representing increases of 34.8% and 29.6%, respectively, compared to the same period last year. Due to expectations of improved earnings, APR's stock price showed an upward trend from May to June, rising 38.4% over two months, which was 34 percentage points higher than the market average.

The strengthening of shareholder return policies also helped improve investor sentiment. APR announced that it would implement shareholder return policies such as cash dividends and share buybacks and cancellations amounting to about 25% of adjusted consolidated net income through 2026. It decided to buy back and cancel treasury shares worth 60 billion KRW by December this year. An APR official explained, "We pursue a healthy partnership with shareholders through active shareholder return policies."

Meanwhile, the securities industry expects APR's stock price to seek a rebound after the earnings announcement. The growth outlook for the second half of the year remains valid. Sojeong Cho, a researcher at Kiwoom Securities, said, "We expect export-driven growth in the second half, with the U.S. leading the growth." She added, "We plan to gradually increase operations centered on Amazon and TikTok Shop to raise market awareness and sales scale," and "there is high anticipation for the November Black Friday and December holiday events." Hyunjin Park, a researcher at Shinhan Investment Corp., explained, "There are some concerns among market investors that the export growth rate of beauty devices in June and July was lower than expected, so the export figures to the U.S. in August and September are important."