K-Beauty Booms Globally, but Cosmetics Stocks Fail to Shine

Cosmetics Stocks Hit Consecutive 52-Week Lows
Amorepacific Falls Below 100,000 Won for First Time in Three Years
Strong Fundamentals Amid Rising Exports
Stock Prices Sluggish Due to Supply-Demand Imbalance and Sector Neglect

Although the popularity of K-beauty is rising in the global market, this trend is not being reflected in the stock prices of cosmetics companies. Cosmetics stocks continue to underperform, with many recording new 52-week lows. Despite strong export performance, it appears that supply-demand imbalances are making a rebound in share prices difficult.

According to the Korea Exchange on June 24, Amorepacific hit a 52-week low during the previous trading session, dropping to 95,700 won intraday. Amorepacific closed at 96,200 won, down 4.47% from the previous session, bringing its share price below 100,000 won for the first time in about three years since July 2023. LG Household & Health Care also set a new 52-week low by hitting 220,000 won intraday. In addition, companies such as Cosmax, Korea Cosmetic Manufacturers, and Tony Moly also recorded new 52-week lows on this day.

The fundamentals of cosmetics stocks remain sound. Foreign investors continue to favor K-beauty, and export performance remains strong. According to Korea Investment & Securities, cosmetics exports from June 1 to June 20 this year increased by 23.5% compared to the same period last year. In May, cosmetics exports reached USD 1.18 billion, up 24.2% year-on-year, marking the highest level ever for the month of May, while in April, exports hit USD 1.354 billion, the largest monthly volume this year.

This robust export trend is expected to continue moving forward. Kim Myungjoo, a researcher at Korea Investment & Securities, stated, "Given that Korean cosmetics brands are only just beginning to enter offline channels in the U.S., the positive trend in exports to the U.S. is likely to persist through the second half of the year," adding, "It is also encouraging that exports to China have stopped declining year-on-year and are showing signs of recovery."

Park Hyunjin, a researcher at Shinhan Investment & Securities, analyzed, "The export ratio compared to Korea's total cosmetics production is approaching 70%, and the trade surplus has grown to a scale of 12 trillion won," adding, "In particular, the harmonious expansion of categories and regions in advanced markets reminds us once again that the export growth trend of Korean cosmetics is part of a mid- to long-term growth cycle."

Earnings forecasts for the second quarter of this year are also positive. According to financial information provider FnGuide, Amorepacific's consensus operating profit (average forecast by securities firms) for the second quarter is expected to reach 9.59 billion won, up 30.24% year-on-year. APR's operating profit is projected to surge 99.26% to 16.88 billion won. LG Household & Health Care's consensus operating profit is expected to rise 31.69% to 7.22 billion won, Korea Kolmar by 26.09% to 9.26 billion won, Cosmax by 14.23% to 6.95 billion won, and Dalba Global by 47.31% to 4.31 billion won.

Despite these strong fundamentals, share prices remain sluggish due to supply-demand imbalances leading to neglect of the sector. Recently, as the KOSPI surpassed the 9,000 mark and demonstrated strength, the semiconductor sector experienced a pronounced concentration of capital, driving up related stocks. Researcher Kim analyzed, "Even with the strong export performance of cosmetics, the recent share price trend in the sector has been disappointing, as supply-demand continues to concentrate on leading sectors in the market."

Reflecting the impact of this supply-demand concentration, NH Investment & Securities lowered its target price for Amorepacific from 180,000 won to 160,000 won. Jung Jiyoon, a researcher at NH Investment & Securities, explained, "Despite stable performance this year, valuations have fallen to a 12-month forward price-to-earnings ratio (PER) of 16.6 times due to supply-demand effects," adding, "In the second half, improvements in e-commerce channel sales and rankings, in addition to the existing Western offline base, will serve as a catalyst for share price recovery."

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