Kyobo Securities said on the 8th that APR's growth drivers, including profitability improvement and regional expansion, look solid as excess demand continues worldwide. It maintained a "Buy" rating and raised the target price to 5.5 million won from 4.7 million won. APR's closing price in the previous trading day was 401,500 won.
Kwon U-jung, a Kyobo Securities researcher, said, "Global excess demand is continuing," and added, "Driven by sales leverage, profitability is improving, regional expansion has begun centered on Europe and other Western markets, and offline channel expansion is underway, leaving overall sales and profit growth engines in a very strong position."
APR disclosed the previous day that, on a consolidation basis for the first quarter of this year, it posted revenue of 593.4 billion won and operating profit of 152.3 billion won. Both revenue and operating profit were the highest ever on a quarterly basis, surging 123% and 173.7%, respectively, from a year earlier. The results beat the market consensus of 145.6 billion won by 8%. The operating profit margin (OPM) came in at 25.7%, up 5.2 percentage points from a year earlier, showing a sharp improvement in profitability.
Kwon explained, "Although the first quarter is a low season, results in the United States and Japan held up quarter over quarter, while business-to-business (B2B) and other sales increased by 70 billion won from the previous quarter, marking the highest results ever."
In the United States, first-quarter sales rose 251% year over year to 248.5 billion won. Strong sales during the Amazon Spring Day event and higher regular sales led to a steady trend versus the prior quarter. Offline sales are estimated at about 25–30 billion won.
At Ulta Beauty, the largest cosmetics distributor in the United States, the number of stock keeping units (SKUs) listed is assessed at 51 online and 20 offline, while the target number of listings is estimated, based on the website, at 17 online and 12 offline.
In addition, according to media reports, from June, products are expected to be listed at 3,200 Walmart stores, and Costco is also planning additional listings.
Sales in Japan were 58.9 billion won, up 101% from a year earlier. Both online and offline sales are assessed to have been steady.
B2B and other sales came to 190 billion won, up 213% from a year earlier.
Kwon said, "This reflects sales growth on Amazon and TikTok Shop in the United Kingdom and broadly solid demand increases in Europe, Southeast Asia and Latin America," adding, "We assess that there is currently excess demand, with the pace of global demand growth outstripping the pace of inventory growth."
For marketing and logistics costs, advertising and promotion accounted for 19%, sales commissions 17% and freight 7%. Due to increased air transport volume, 20 billion won was spent on freight in the first quarter, but it is expected to decrease from the previous quarter as the year moves into the second and third quarters.
Tariff refund expense is assessed at more than 20 billion won and is scheduled to be recognized over the second and third quarters.
Kwon added, "Despite the low season in the first quarter, results were solid, and there are many factors to look forward to in the second quarter," noting, "Management expects to continue maintaining the current high level of profitability going forward."