Shinhan Investment Corp. noted on the 13th that while the brand Laneige of Amorepacific Corporation is expected to grow better than anticipated, it is less known in the market compared to adverse issues, stating, "There is only improvement left, so the current stock price is at the bottom." The investment opinion remains "buy" with a target price of 163,000 won. The closing price of Amorepacific Corporation on the previous trading day was 115,700 won.
Shinhan Investment Corp. projected that Amorepacific Corporation's consolidated revenue for the fourth quarter of last year would increase by 13% compared to the same period the previous year, amounting to 1.0454 trillion won. They estimated the operating profit would rise by 304% year-on-year to 83.7 billion won, which aligns with the consensus (the average forecast from securities firms).
In particular, it was anticipated that overseas sales would grow. Park Hyun-jin, a researcher at Shinhan Investment Corp., stated, "Domestic sales will maintain the level of the same period last year, but overseas sales are expected to grow by 34% and follow the trend of the previous quarter," adding, "Especially, sales in Europe and North America are expected to grow by 54% and 142%, respectively, driving growth for Amorepacific Corporation."
This explains that the brand Laneige has played a leading role in its growth within North America. Researcher Park stated, "The growth of the Laneige brand in North America is dominant. Laneige has a high recognition in the lip category, which is currently increasing its contribution to revenue and profit," and noted that "the proportion of Laneige sales within North America is over 60% (estimated at 20-30% including COSRX)."
It was observed that Laneige's sales account for 70% in Europe as well. Researcher Park noted, "This year, Laneige is expected to account for about 20% of the company's overall performance in sales," adding that "especially, Laneige is also driving sales growth in Japan, essentially making it the group's representative brand after COSRX."
On the other hand, the existing representative brand COSRX is facing adverse factors as its sales growth has slowed and it continues to incur operating losses in China. Researcher Park anticipated that "COSRX's sales in the fourth quarter of last year will grow around 5%," stating that "the recent restructuring of the pricing policy for the hit item Snail Essence has slowed sales growth." He also estimated the operating loss in China to be 20 billion won (reflecting guidance), attributing it to ongoing changes in the transaction structure and improvements to unfair contract structures. Researcher Park evaluated, "While the aim is to eliminate the deficit by the second quarter of this year, it is burdensome to expect significant growth."
Meanwhile, regarding Amorepacific Corporation, he stated, "The valuation (whether the decline is excessive) is at a historical low," noting, "The momentum in North America is spreading to Europe and Japan. It will be slow, but fundamentals are expected to improve gradually."