Shinhan Investment & Securities said on the 7th that while d'Alba Global's quarterly sales growth rate continues to hold a relative edge within the cosmetics sector, further improvement in its operating margin remains limited. It maintained a Buy rating and a target price of 260,000 won. d'Alba Global's closing price the previous day was 151,700 won.
Shinhan Investment & Securities projected d'Alba Global's first-quarter consolidation sales at 179.5 billion won and operating profit at 43.1 billion won. The figures imply year-over-year growth of 58% and 43%, respectively.
Park Hyun-jin, an analyst at Shinhan Investment & Securities, said, "Results are expected to exceed the company's guidance," and noted, "The reason is the strong ranking of distribution channels in Western markets."
In particular, d'Alba Global's domestic sales were expected to grow 15%, and overseas sales 91%. It was analyzed that sales growth in North America, Europe, and ASEAN likely drove overall performance growth.
By sales mix, Korea was forecast to drop to the low-30% range, down more than 10 percentage points. Japan, ASEAN, and North America were each expected to rise to around 24%, 13%, and 11%, and Europe's share to 6%, up more than 3 percentage points.
Park said, "Sales through domestic health and beauty (H&B) channels are projected to increase by triple digits from the previous quarter," adding, "In Japan, sales are growing through expansion of both online and offline stores."
In North America, as Amazon hero products are nurtured, product rankings are trending higher. In Europe, multiple products are entering Amazon's top 100.
Park explained, "Recently, in personal care such as hair, hand, and body, and even into makeup, demand is rising for high-performance, high-priced signature products, which is a positive trend."
However, profit growth was seen as the key. While the quarterly sales growth rate continues to hold a relative edge within the cosmetics sector, further improvement in the operating margin remains limited.
Park said, "The operating margin in the first quarter of last year was at an abnormal profit level due to early expense recognition," and added, "Toward the third quarter of this year, operating leverage through growth in business-to-business (B2B) sales is expected to come to the fore."
In particular, the full-year operating margin was projected to improve by around 1 percentage point from a year earlier. Shinhan Investment & Securities analyzed that d'Alba Global is likely to focus more on margin improvement in the second half than in the first half, and that valuation remains attractive relative to topline growth.