APR cuts target price amid FX and logistics cost pressures ... “Global growth remains strong”

[Financial News] Hyundai Motor Securities said APR’s short-term profitability had weakened under the pressure of foreign exchange rates and logistics costs, but that strong growth in overseas markets continued. It maintained its Buy rating while lowering its target price from KRW 510,000 to KRW 440,000.
Hyundai Motor Securities analyst Ha Hee-ji said on the 2nd, “APR’s consolidated revenue for the third quarter rose 100.3% year over year to KRW 773.1 billion, while operating profit increased 67.1% to KRW 160.6 billion, falling short of market expectations.”
Foreign exchange rates and logistics costs were cited as the main causes of the weaker results. The stronger won reduced revenue when translated into won, and that reduction, together with net losses related to foreign currencies, had a negative impact of KRW 27.8 billion on operating profit. Higher air freight rates and local logistics costs, as the company responded to a sharp rise in demand in Europe, also constrained profitability.
It was viewed positively that strong revenue growth continued, led by offline sales in the United States and online sales in Europe, despite the stronger won.
By region, North American revenue rose 117.5% year over year to KRW 355.6 billion. Revenue fell from the previous quarter amid a lack of promotions on major online channels, but the contribution from offline channels such as Target, Walmart Inc. and Ulta Beauty increased. European revenue surged 738.4% year over year to KRW 177.8 billion. Growth continued as more products entered the top 100 in sales rankings on online channels.
Analyst Ha said, “In the short term, higher air freight and logistics costs to meet growth in Europe, along with foreign exchange gains and losses, will constrain profitability,” but added, “Given the still-unparalleled demand in key markets and Amazon’s peak-season promotions in the fourth quarter, the global growth momentum remains intact.”

[email protected] Im Sang-hyeok Reporter