April 26, 2024

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[THE INVESTOR] Amorepacific’s third-quarter earnings have been below expectations, said KB Investment and Securities on Oct. 30 lowering the target price to 170,000 won (US$148.81) from 270,000 won while maintaining a “hold” recommendation. 

Its revenue and operating profit came in at 1. 28 trillion won and 76.5 billion won, respectively, 5 percent and 42 percent lower than market consensus. Revenue from its mid- to low-priced range is declining both at home and in China, deepening concerns. Sales in all domestic channels besides duty-free stores have decreased while in China revenue from better-priced lines has waned undermining growing sales of Sulwhasoo and Hera, said analyst Park Sin-ae. 

Samsung Securities’ analyst Park Eun-gyeong echoed the analysis saying that even factoring in 22.7 billion won one-off costs the cosmetics giant has disappointed in Korea and China. 

It has aggressively carried out marketing campaigns in both markets to turn around deteriorating sales but failed to trigger instant effect which only cut down its profits, said the analyst lowering the target price to 160,000 won from 250,000 won while maintaining a “hold” recommendation. 

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