APR Proves Profitability... Upward Earnings Momentum and New Growth Engines [Click e-Stock]

Concerns Over High Costs, But Operating Margin Remains Strong
Expansion in North America... Logistics Cost Burden Expected to Ease

APR posted results in the second quarter of this year that exceeded market expectations. Analysts say performance forecasts for the second half are also rising, with growing anticipation for new growth drivers.

On the 6th, Yuanta Securities maintained its target price for APR at 5.4 million won and its 'Buy' investment rating, citing these factors. The previous day's closing price was 357,500 won.

In the second quarter of this year, APR recorded sales of 767.5 billion won and operating profit of 190.6 billion won. Compared to the same period last year, sales increased by 134% and operating profit by 135%. Operating profit also slightly outpaced the market consensus of 178.7 billion won.

Initially, the market was concerned about potential damage to profitability due to one-off marketing costs and increased air freight expenses. Advertising-to-sales ratios rose due to main sponsorships such as Coachella, and some air freight costs were reflected in cost of goods sold. However, high growth in the cosmetics and beauty segment and a 13 billion won customs duty refund offset these factors.

Diversification of North American channels also received positive reviews. The proportion of offline sales in North America increased from 18% in the first quarter to 23% in the second quarter, a rise of 5 percentage points. Total North American sales grew by 265% year-on-year, continuing the company's growth trend. The company expects that inventory stabilization in the second half will gradually alleviate air logistics cost burdens as well.

Performance guidance has also been raised. APR increased its sales target for this year from the previous 2.1 trillion won to 3 trillion won. The target operating margin was presented in the range of 24%-26%, up from the previous 25%. Yuanta Securities stated that expectations for second-half performance will rise in tandem.

Expectations are also growing for new businesses. The energy-based device (EBD) has completed domestic regulatory approval and is set for launch at the end of this year or early next year. For skin boosters, the polynucleotide (PN)-based product has obtained both the Ministry of Food and Drug Safety class 2 medical device certification and export approval. Small-scale exports began in the second quarter, and from the third quarter, overseas sales in key markets, such as Japan and the Middle East, are expected to ramp up. As meaningful results are emerging in both the body and hair segments, expectations of a broader product portfolio are growing.

Lee Seung-eun, a research analyst at Yuanta Securities, explained, "Contrary to initial concerns, the operating margin did not decline," adding, "Expansion of North American offline sales and rising expectations for new business opportunities are coming together."

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