NH Investment & Securities said on the 7th that, for Amorepacific(090430), earnings growth is expected to continue on the back of the rise of derma brands and a strategy to expand global multi-channels. It maintained a Buy rating and raised the target price to 185,000 won from 170,000 won. The previous trading day's closing price was 143,300 won.
NH Investment & Securities estimated Amorepacific's third-quarter consolidated sales this year at 1.127 trillion won, up 11% from a year earlier, and operating profit at 114.6 billion won, up 25%, and said it would likely meet market expectations.
Domestic sales were analyzed to come in at 608.1 billion won, up 9% from a year earlier, with operating profit at 64.1 billion won, up 8%. It assessed that sales growth is continuing across key channels such as duty-free, multi-brand shops, and e-commerce, helped by an increase in foreign tourists visiting Korea and a weaker dollar.
Overseas sales were estimated at 498.2 billion won, up 13% from a year earlier, with operating profit at 55.2 billion won, up 29%. By region, sales growth is projected at 4% in Asia, 20% in North America, and 29% in Europe, the Middle East and Africa (EMEA). Despite reducing stores in China, it is maintaining a profit, and diversification of the brand portfolio in the United States, including Innisfree and AESTURA, is driving growth.
In particular, this year, derma brands such as COSRX, AESTURA, and Illiyoon are showing pronounced growth. NH Investment & Securities estimated that the share of derma brands in companywide sales this year will increase to 25%.
In the first half of this year, the combined domestic sales of AESTURA and Illiyoon reached 167 billion won, up 48% from a year earlier, accounting for about 13% of domestic sales. COSRX is also expected to continue its turnaround, with third-quarter sales and operating profit rising 31% year over year to 139.5 billion won and 34.2 billion won, respectively.
Jeong Ji-yun, an analyst at NH Investment & Securities, said, "From next year, margins from ordinary operations are expected to rise as scale expands in new growth channels such as Amazon and TikTok Shop and new brands enter offline channels in the West," and added, "Expanding the share through diversification of derma brand portfolios and a multi-channel strategy is valid."