NH Investment & Securities said on the 9th that, excluding one-off expense, Amorepacific's fourth-quarter results last year were in line with estimates, noting that uncertainties such as costs for voluntary retirement and results at COSRX are being removed. It maintained a Buy rating and raised the target price to 180,000 won from 175,000 won. Amorepacific's previous closing price was 137,300 won.
Researcher Jeong Ji-yoon at NH Investment & Securities said, "In the fourth quarter last year, operating profit missed the consensus (market average forecast) due to voluntary retirement expense," and added, "This year, in addition to the savings on labor costs, the COSRX results that had weighed on the share price have shown a rapid turnaround, easing uncertainties."
It was noted that the pace of COSRX's sales recovery was faster than expected in this earnings release. Jeong said, "We view positively the change in the two-track growth strategy with SILICON2 and the Europe subsidiary," adding, "Even excluding seasonal factors, sales to Europe through SILICON2 collaboration rose 56% year over year, showing greater agility in opening new markets."
Domestic voluntary retirement expense was seen as fully reflected in the fourth quarter last year. Accordingly, it was explained that annual labor cost savings of about 20 billion won are expected this year.
Jeong assessed, "The company has entered a phase of higher visibility for companywide results."
Meanwhile, Amorepacific posted, on a consolidation basis, fourth-quarter last year revenue of 1.1634 trillion won and operating profit of 52.5 billion won. Revenue rose 7% year over year, while operating profit fell 33%. The impact reflects a one-off expense of 53.6 billion won related to voluntary retirement.