[Click eStock] "Aekyung Industrial, Q4 Earnings Expected to Fall Short of Estimates... Target Price Down"

Target Price Revised Downward by 46% Compared to Previous Level

On the 26th, Hanwha Investment & Securities downgraded the target price of Aekyung Industrial from 35,000 KRW to 19,000 KRW, anticipating that the company's Q4 earnings this year will fall short of market expectations. The investment rating was maintained as 'Buy.'

Han Yoo-jung, a researcher at Hanwha Investment & Securities, explained, "The target price was lowered due to a downward revision of profit estimates," adding, "To foster healthy long-term growth, it is necessary to resolve the limitations of low domestic growth and uncertainties in the Chinese business by achieving performance growth in overseas countries outside China."

Aekyung Industrial's Q4 earnings are expected to fall below market forecasts. The researcher stated, "Consolidated sales for Q4 are projected to decrease by 1.6% year-on-year to 173 billion KRW, and operating profit is expected to decline by 24.0% to 8.8 billion KRW, falling short of the consensus operating profit estimate of 12.4 billion KRW. The Korean market is anticipated to see a sales decline due to intensified competition in the home care product segment, while in China, despite a continued consumption downturn, strong sales during the Singles' Day (Guanggunjie) event are expected to reduce the contraction rate compared to the previous quarter. In Japan, new channel entries are occurring faster than expected, helping to maintain sales in other regions at last year's levels," he analyzed.

Given that uncertainties in China are negatively impacting performance, expansion into regions outside China appears crucial. The researcher noted, "Due to the household goods business growing mainly domestically, the company's domestic sales proportion is relatively high. To overcome this, the cosmetics business has been expanding its share in China, but recent external uncertainties have led to sluggish performance there. Fortunately, offline expansion of the LUNA brand in Japan is progressing smoothly, and in April, a business agreement was signed with Silicon2 for the United States as the country and AGE20’S as the brand to expand sales. Going forward, there is a high possibility of accelerating market entry beyond the U.S. by expanding the range of partner countries and brands."