Korea Investment & Securities Co. said on the 21st that APR's sales in Europe would continue strong growth this year, following last year, contributing to results. It maintained its "Buy" investment opinion and raised its target price to 500,000 won from 275,000 won. APR's closing price in the previous session was 414,500 won.
Kim Myung-joo, an analyst at Korea Investment & Securities Co., said, "The strategy to increase sales by using the master distribution contracts signed with local European distributors last year continues to be effective," and added, "The high growth in sales to Europe that drove last year's earnings surprise (results exceeding expectations) will continue in the first quarter of this year."
Korea Investment & Securities Co. projected APR's first-quarter consolidated revenue this year at 569 billion won and operating profit at 141.1 billion won. It said revenue would rise 113.9% and operating profit 158.6% from a year earlier, with both revenue and operating profit meeting market expectations.
Kim said, "In the United States, APR's Zero Pore Pad product has begun to be recognized as the brand representing the pore pad category," adding, "Even though it is not a special shopping season, APR's products continue to remain within the top two in Amazon's Beauty & Personal Care category."
First-quarter U.S. sales this year were projected at 268.2 billion won, up 5.1% from last year. This is an increase of 278.3% from the same period a year earlier.
APR is building brand power by using business-to-business (B2B) transactions while directly selling products on Amazon channels in major European countries.
Regarding this, Kim said, "Some investors worry that using both B2B and business-to-consumer (B2C) channels at the same time will damage brand power," adding, "Currently, the share of Korean cosmetics in Europe is very low, so there is no need to worry about conflicts between B2B and B2C channels." As of last year, Korean cosmetics' market share in Germany's cosmetics industry was 1.8%, the United Kingdom 3.3%, and France 4.1%.
APR's operating margin this year was expected to reach 25.5%, up 1.6 percentage points (P) from a year earlier. The increase reflects a higher share of sales from the more profitable B2B channel.
Kim added, "APR's target market is global beyond the United States, and considering this, additional valuation (corporate value) upside is possible."