[Click eStock] "VT's Earnings Growth Limited This Year... Target Price Down 35%"

Target Price Lowered by 35.3% from Previous Estimate

On March 31, KB Securities announced that it expects VT's earnings growth to be limited this year and has lowered its target price from 34,000 won to 22,000 won. The investment opinion remains 'Buy'.

Minyoung Son, a researcher at KB Securities, explained, "With intensifying competition from K-Indie brands, sales growth in VT's main markets—Korea and Japan—has slowed. Meanwhile, increased marketing expenses associated with expansion into Western markets such as the United States and Russia have caused the operating margin to drop sharply from the high 20% range to the low 10% range since the third quarter of last year." Son added, "Accordingly, we have revised down this year's operating profit forecast by 42.2% compared to the previous estimate." He continued, "However, the company is actively working to increase sales in new growth regions such as the United States through marketing investments. In addition to its flagship product, Riddle Shot, VT is launching and expanding a lineup of products such as PDRN to respond to market trends. We are maintaining our investment opinion due to the company's agile response to market changes and expectations that the effects of this year's marketing investments will become visible."

In the fourth quarter of last year, VT posted sales of 101 billion won, up 3.3% year-on-year, while operating profit fell 61.6% to 10.9 billion won. Researcher Son analyzed, "Domestic sales decreased by 9.6% to 27.5 billion won, mainly due to sluggish sales at Olive Young stemming from seasonal factors, and sales in Japan declined despite it being the peak shopping season." He continued, "On the other hand, sales in the United States surged 210.9% to 17 billion won, with growth in online channels such as Amazon and TikTok, and an additional 5.3 billion won from B2B channels including Ulta and Costco." Operating profit was sluggish due to increased marketing expenses from new model contracts and pop-up store events.

KB Securities estimates that VT's earnings this year will include sales of 416.7 billion won, up 9.4% year-on-year, and operating profit of 59.3 billion won, down 19.7%. Son commented, "Despite strong growth in the United States and Russia, overall sales growth is expected to be limited due to the slowdown in Korea and Japan, and higher marketing expenses in new growth regions will make it difficult to achieve high margins."

This content was produced with the assistance of AI translation services.