April 26, 2024

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[THE INVESTOR] South Korean cosmetics maker It’s Skin is struggling with a plunging share price as China’s has intensified regulations posing a risk to the company.

Since its listing on the KOSPI market in December 2015, shares of the company have suffered a loss of over 50 percent, mainly due to geopolitical tensions between South Korea and China -- the market that accounts for a growing portion of the firm’s revenue. 

“It is highly likely that the sales growth at duty-free shops will be low due to the decrease in Chinese tourists and export demand will continue to be sluggish due to slow demand in China,” said Park Hyun-jin, an analyst at Dongbu Securities.

Frictions between China and South Korea have been mounting following an announcement by Washington and Seoul in July that the US would deploy an anti-ballistic missile battery on the Korean Peninsula by end-2017.

It’s Skin sales were hit by the Chinese government’s tightened regulations on import and tariff issues.

Industry watchers said that the Chinese health authorities have been delaying their approval for It’s Skin’s flagship snail slime cream due to the political tensions.

Last year, It’s Skin CEO Yoo Geun-jick hinted that that company will tap deeper into the Chinese market for “sustainable growth,” pushing boundaries of the smaller domestic market.

But the external uncertainty needs to be cleared to make its shares bounce back, analysts said.

By Park Han-na (hnpark@heraldcorp.com)