[Click eStock] Amorepacific, COSRX Growth Slows... Target Price Downgraded

On the 1st, Korea Investment & Securities lowered the target price of Amorepacific from 200,000 won to 170,000 won, a 15% cut. This was due to a noticeable slowdown in the growth rate of COSRX, which had driven the company's valuation increase. However, the investment rating was maintained at 'Buy.'

Researcher Kim Myung-joo mentioned this in a report released that day, stating, "However, due to the earnings surprise seen for the first time in a while and the improved expectations for the China business, short-term stock price volatility is expected, and we recommend using this as a trading opportunity."

He added, "However, it is clear that a new story capable of driving COSRX's sales recovery or valuation recovery is needed for a sustained upward trend in the stock price."

Amorepacific's Q3 consolidated sales increased by 9.9% year-on-year to 977.2 billion won, and operating profit grew by 277.7% to 65.2 billion won, exceeding market expectations by 51.8% (operating profit). Researcher Kim Myung-joo analyzed, "Although sales did not improve significantly, operating profit exceeded expectations because the operating loss in the China business was not as large as the market feared," and added, "The China business loss is expected to continue in Q4, but the scale is likely to be smaller than in Q3."

He diagnosed that in the past one to two months, the investment sentiment in the sector has been damaged due to consecutive poor earnings of global consumer goods companies and concerns about intensified competition within the U.S. cosmetics industry.

Researcher Kim said, "COSRX's sales of Amorepacific in Q3 appear to have increased by less than 10% year-on-year, with the main cause of the sluggishness estimated to be poor performance in the U.S. e-commerce channel," and predicted, "Although it will be difficult to expect the explosive growth shown in the first half of this year next year, stable sales growth and profit generation are expected to steadily contribute to the company's performance."