Amorepacific: Earnings Expectations Rise on Growth of Its Derma Brands; Target Price Raised

[Financial News] NH Investment & Securities maintained its Buy rating on Amorepacific on the 7th, citing the company's earnings growth, and raised its target price from KRW 170,000 to KRW 185,000.
Jeong Ji-yoon, an analyst at NH Investment & Securities, noted, "The sales contribution of derma brands is estimated to rise to 25% of company-wide sales this year, driven by the strong performance of COSRX, AESTURA, and ILLIYOON." She added, "AESTURA and ILLIYOON, in particular, have such a strong position in the derma segment in Korea that they have launched products for hospitals and clinics."
Derma refers to functional cosmetics based on dermatological research that focus on addressing skin concerns.
Jeong also highlighted the expansion of Amorepacific's derma products into global markets. She explained, "Following Asian markets such as Japan, Vietnam, and Thailand, the brands are expanding into Canada and Australia after entering Sephora stores in the United States." She added, "By entering approximately 860 Sephora stores across 19 European countries and continuing to expand its global distribution network, the company can be seen as a successful example of moving from specialized products for hospitals and clinics into the mass market and establishing a strong foothold."
She expected the multichannel strategy to gain further momentum next year. The company has been focusing in earnest since this year on growing its social media, Amazon, and TikTok channels, which helped drive North American sales growth to the mid-to-high 50% range in the second quarter.
Jeong forecast, "Because these channels do not offer particularly strong margins during the initial entry phase, the expansion of new brands into B2B channels or offline retailers beyond Sephora will need to accompany this strategy." She added, "If the company expands its top line next year through new growth channels such as Amazon and TikTok Shop, while the entry and expansion of its hair and body brands in offline channels in Western markets provide further support, company-wide margin improvement should continue."
[email protected] Jeong Ji-yoon Reporter