Amorepacific expects earnings to improve through more efficient marketing... “Greater investment appeal over the medium to long term”

[Financial News] On the 8th, SK Securities maintained its “Buy” rating and target price of 180,000 won for Amorepacific Corporation, citing expectations of improving earnings following a strategic shift.
SK Securities analyst Hyeong Gwon-hun said, “Unlike its previous approach of building its brand business in Western markets primarily through Sephora, Amorepacific Corporation is expanding customer touchpoints and pursuing greater marketing efficiency with a strategy centered on social media, Amazon and TikTok.” He added, “Having thoroughly fine-tuned its approach through testing over the past year, the company is expected to deliver top-line growth and an improvement in its operating margin next year, making it an attractive investment over the medium to long term.”
The analyst forecast third-quarter revenue of 1.1225 trillion won and operating profit of 108.4 billion won, both below market consensus. Given the proactive marketing investment ahead of Amazon’s promotion, the operating margin estimate was lowered by 0.7 percentage points from the previous estimate.
Double-digit growth was expected in Western markets. Analyst Hyeong said, “With Amazon Prime Day moved up to the second quarter, we estimate that sales in North America and Europe, the Middle East and Africa (EMEA) grew 24% and 12%, respectively, despite the high comparison base for third-quarter top-line growth.” He noted, “Retail sales traffic for COSRX and AP brands appears to have remained healthy despite the lull in promotions.”
He added, “Domestic revenue is likely to have grown 10%, with continued strength in sales through duty-free and multi-brand shop channels,” and, “In Greater China, revenue is expected to have declined 9.2% due to adjustments to offline channels.”
[email protected] Seo Min-ji Reporter