[Edaily Reporter Kim Hyung-il ] NH INVESTMENT & SECURITIES forecast that AMOREPACIFIC CORPORATION(090430)will achieve medium- to long-term revenue growth and improved profitability, driven by the growth of its derma brand and the expansion of new sales channels. The firm maintained its “Buy” rating and raised the target price from 170,000 won to 185,000 won.

On the 7th, Jeong Ji-yoon, an analyst at NH INVESTMENT & SECURITIES, revised the valuation calculation period to next year. She estimated that the revenue share of derma brands would rise to 25% of total company revenue this year, driven by the strong performance of COSRX, Estra, and Ilyoon.

The firm projected that revenue growth would continue next year through new growth channels such as Amazon and TikTok Shop. It also expected that the entry of new brands into offline channels in Western markets and the expansion of distribution channels would lead to a steady increase in margins. Accordingly, it determined that increasing the weighting of the stock in a portfolio remains a sound strategy.

Third-quarter earnings are expected to meet market expectations. Consolidated revenue is estimated at 1.127 trillion won, an 11% increase year-over-year, while operating profit is projected to rise 25% to 114.6 billion won.

Domestic revenue is expected to rise 9% to 608.1 billion won, while operating profit is projected to increase 8% to 64.1 billion won. The operating profit margin is estimated at 10.5%. Revenue growth rates by channel are forecast at 10% for duty-free shops, the high teens for multi-brand shops (MBS), and around 8% for e-commerce.

Sales conditions in these channels are improving due to the increase in foreign tourists visiting Korea and the weak U.S. dollar, and the Chuseok holiday season in September was cited as another positive factor.

Overseas sales are projected to rise 13% to 498.2 billion won, while operating profit is expected to increase 29% to 55.2 billion won. Regional sales growth rates are estimated at 4% for Asia, 20% for North America, and 29% for Europe, the Middle East, and Africa (EMEA).

For the core business, regional sales growth rates are expected to be -14% in China, 20% in Japan, 17% in North America, and -10% in EMEA. In China, the company is projected to maintain profitability despite a reduction in department store locations.

Analyst Jeong noted, “While Laneige sales may be somewhat sluggish in Western markets, the company will maintain stable growth in the U.S. through portfolio diversification with brands such as Innisfree and Estra,” adding, “During Japan’s Mega-Wari event, Estra, COSRX, and IOPE maintained strong rankings.” As of the 6th, these brands had 6 to 7 products ranked within the top 50.

He continued, “We expect some marketing expenses to be reflected following the official launch of Sulwhasoo in Japan,” and predicted, “Cosrx’s sales will reach 139.5 billion won, a 31% increase year-over-year, and operating profit will rise 31% to 34.2 billion won.”