[EQUITIES] Solid footing in China to bolster AmorePacific’s Q2 earnings

[THE INVESTOR] AmorePacific, South Korea’s largest cosmetics maker, is expected to log strong second-quarter earnings thanks to its solid performance in China, a local securities firm BNK Securities said on July 18.

On a consolidated basis, sales for the April-June quarter were estimated at 1.43 trillion won (US$1.26 billion), up 20 percent on-year while its operating profit will expand by 18.9 percent to 247.5 billion won, according to Lee Seung-eun, an analyst at BNK Securities. 

Three brands under AmorePacific -- Laneige, Innisfree and Sulwhasoo -- have been driving the company’s sales growth in the Chinese market.

During the period, sales from duty-free stores have seen to grow 57.5 percent on-year on the back of a growing number of Chinese tourists, she said.

The analyst said that the company’s face mask sheets are gaining popularity in China, following its Air Cushion compact, a huge hit in 2014 and spawned many copycat products throughout the industry.

“Mask pack sheets will become a driving force for growth as the products have been upgraded to Bio-Cellulose sheets which have better absorption properties and enhanced adhesion,” she said.

In the first quarter, the firm’s operating income rose 31 percent on-year to 419 billion won, while sales gained 22 percent to 1.75 trillion won, it said.

BNK Securities retained a buy rating on the company‘s stock and raised the price target to 580,000 won.

By Park Han-na (hnpark@heraldcorp.com)