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3Q23 review: Resilient earnings, excluding one-off expenses

For 3Q23, Amorepacific announced revenue of W888.8bn (-5% YoY) and operating profit of W17.3bn (-8% YoY), with both figures missing expectations. China revenue fell 18% YoY despite an easy comparison, and earnings were further hurt by over W30bn in one-off labor expenses. That said, excluding one-off expenses, domestic OP margin was resilient at 10%.

Amorepacific to acquire additional stake in COSRX; 2024F overseas revenue to surge 40% YoY (ex-China share: 70%)

Amorepacific plans to increase its stake in skin care company COSRX to 93% and incorporate the firm as a consolidated subsidiary from May 2024. COSRX generates around 90% of its revenue overseas, mostly in ex-China regions. In 2024, COSRX is expected to post revenue of W564.3bn (+21% YoY) and operating profit of W191.9bn (OP margin of 34%). With COSRX likely to make a sizable contribution to ex-China overseas earnings, we expect consolidated overseas revenue to surge 40% YoY in 2024, with ex-China regions representing up to 70%.