April 20, 2024

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[THE INVESTOR] Amorepacific’s earnings growth is slowing down, said Shinyoung Investment and Securities on Oct. 15 lowering the target price to 270,000 won (US$238.33) from 320,000 won while maintaining a “buy” recommendation.

Its revenue in the third quarter will increase 10.4 percent on-year to 1.34 trillion won and operating profit by 29.9 percent to 131.3 billion won, Earnings from its duty-free stores will be restored but growth of sales in China will lose speed. Sales at duty-free stores did gain from easing regulations on purchase limitations since July but not as much as expected. Sales of Innisfree, which accounts for half of its revenue in China, will rise only 10 percent in the third quarter while those of Laneige, Mamonde and Etude will decline, said analyst Shin Su-yeon.

There is a considerable gap between possibilities and expectations for a sharp growth. Mid- to low-priced cosmetics market is sluggish and investors should reconsider brand preferences for Amorepacific, added the analyst. 

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