Shinhan Investment Corp. assessed on the 25th that Amorepacific is experiencing strong sales growth in the U.S., Europe, and the Middle East, while its deficit in China is decreasing as expected.
Park Hyun-jin, a researcher at Shinhan Investment Corp., analyzed that “Amorepacific’s consolidated sales for the first quarter this year are expected to be KRW 1.09 trillion and operating profit KRW 108.4 billion, up 20% and 49% year-on-year, respectively, slightly exceeding the current consensus.”
He added, “While domestic sales are expected to be similar to the same period last year, overseas sales are projected to grow by 54%, driving overall performance growth. Notably, sales in Europe and North America are expected to increase by 200% and 115%, respectively.”
Regarding the North American market, he noted that the strength of the Laneige brand continues, increasing its contribution to sales and profit based on high recognition. Laneige accounts for over 60% of sales in North America, and Europe accounts for 70% of sales, with Europe’s operating margin exceeding 20%, significantly boosting profit contribution.
Researcher Park explained that “Korea is growing centered on e-commerce and H&B, while sales in China are expected to have decreased by 20%.”
He continued, “The company has set a target for China’s operating loss to be within KRW 10 billion, including a one-time KRW 5 billion, and from the second quarter this year, Chinese sales are expected to turn to growth. At the current trend, reaching the breakeven point in the second half of the year is not expected to be a problem.”
Park maintained the annual estimates, stating that there are no identified one-time cost issues related to its core business. He further mentioned that there are no significant or only limited losses related to subsidiaries.
The buy recommendation and target stock price of 163,000 won were maintained.