[Featured Stock] 'Earnings Shock' Amorepacific Plummets 20%... Market Cap Drops by 1.7 Trillion Won

Q2 Operating Profit Down 30% Year-on-Year
Impact of Weak Domestic and China Businesses

Amorepacific, the leading cosmetics company, plummeted 20%. This is interpreted as the aftermath of an 'earnings shock' (performance falling short of expectations) following the earnings announcement the previous day.

As of 9:10 AM on the 7th, Amorepacific was trading at 132,700 KRW, down 19.95% (33,100 KRW) from the previous day. Amorepacific sharply dropped right after the market opened, hitting a low of 130,500 KRW before slightly rebounding. Based on the previous day's closing price (159,700 KRW), Amorepacific's market capitalization was 9.3412 trillion KRW, which decreased by about 1.7 trillion KRW to 7.6333 trillion KRW on the 7th.

Amorepacific's Q2 earnings were 904.8 billion KRW in sales and 4.2 billion KRW in operating profit. Due to sluggish duty-free and Chinese subsidiaries, both operating profit figures fell short of consensus (market average forecast). Sales decreased by 4% and operating profit by 30% compared to the same period last year. In particular, operating profit in the domestic business segment dropped 59% year-on-year, and sales in the Greater China region fell 44% year-on-year to 107.7 billion KRW.

Sojeong Cho, a researcher at Kiwoom Securities, said, "Although the proportion of China-bound sales continues to shrink due to the global rebalancing strategy, the cost risks of the Chinese subsidiary are expected to affect the company's consolidated earnings for the time being," adding, "In the case of the Chinese subsidiary, business restructuring movements are inevitable for the time being, and there is a high possibility of operating losses occurring during this process."