April 24, 2024

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[THE INVESTOR] Amorepacific Group will be affected by the slow earnings of its subsidiary Amorepacific, said KB Investment and Securities on Feb. 6, lowering the target price to 150,000 won (US$131.69) from 180,000 won.

The flagship subsidiary’s earnings declined in tandem with those from department stores and home shopping channels struck by slow consumption, said analyst Park Sin-ae. 

The growth of duty-free sales has also slowed down and costs for toothpaste recall and royalty payment to the group have been reflected, added the analyst.

The group’s revenue and operating profit will reach 7.65 trillion won and 1.32 trillion won, up 14 percent and 22 percent on-year respectively, but for the stock price to rebound, Amorepacific’s income should improve first, pointed out Park.

“The earnings will improve this year boosted by the group-wide revenue growth, but considering that two-thirds of its operating profit increase is based on that of Amorepacific, its stocks will be in tandem with the subsidiary for a while,” noted the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)