[Click e-Stock] "Amorepacific Achieves Strong Growth in Key Overseas Markets... Target Price Raised"

Target Price Raised from 160,000 Won to 178,000 Won

Yuanta Securities announced on May 7 that it has raised its target price for Amorepacific from 160,000 won to 178,000 won, citing the company's strong growth and solid profitability in key overseas markets. The investment opinion remains 'Buy'.

Lee Seungeun, a researcher at Yuanta Securities, explained, "The upward revision of the target price reflects the company's continued high growth and solid profitability in key overseas markets such as North America, EMEA (Europe, Middle East, and Africa), and Japan, as well as the visible progress of its company-wide portfolio rebalancing strategy."

In the first quarter of this year, Amorepacific's North American sales increased by 79% year-on-year to 157.2 billion won. Excluding COSRX, sales grew by 30%, and the operating margin remained in the double digits. Laneige posted growth in the high 20% range, Sulwhasoo grew by more than 20%, and Innisfree also recorded double-digit growth. EMEA sales rose by 21.9 billion won year-on-year to 55.3 billion won, and excluding COSRX, growth exceeded 70%. Laneige grew by more than 80%, with the UK, France, and the Middle East all showing balanced growth. In Japan, sales grew by more than 70%. Lee noted, "China saw a 10% year-on-year decline, but returned to profitability for the first time in eight quarters and is expected to maintain a profit margin of 3-5% going forward. The company will accelerate lightweight operations and digital transformation centered on Sulwhasoo." He added, "COSRX sales fell by 35% to 102 billion won due to weak performance in the US and Southeast Asia, with an operating margin of 28%. However, with the reorganization of distribution channels, more than doubling of new product sales, and additional launches planned for May and June, a gradual recovery is expected in the second half of the year."

For its second-quarter earnings guidance, Amorepacific projected mid-teen percentage sales growth year-on-year and an operating margin in the mid- to high-single digits. Lee explained, "The second quarter is seasonally a period when consolidated sales decrease compared to the first quarter, and costs are expected to increase due to incentive payments in June. Nevertheless, the company plans to pursue both profitability and growth through overseas portfolio rebalancing, maintaining profitability in China, and the growth of major brands."