[Click e-Stock] "Neopharm Achieves Record-High Quarterly Sales... Target Price Raised"

LS Securities: "Earnings Momentum to Continue in the Second Half"

On August 10, LS Securities raised its target price for Neopharm from KRW 24,000 to KRW 30,000, while maintaining its "Buy" investment rating.

Orina Oh, analyst at LS Securities, stated regarding Neopharm, "We have revised up our earnings estimates for the second half, and have applied the previous target multiple of 12 times to the 12-month forward expected earnings per share (EPS)." She added, "We expect that the earnings momentum will continue, driven by export growth and the structural expansion of the derma category."

For the second quarter of this year, Neopharm's consolidated sales amounted to KRW 43.6 billion, up 36.2% year-on-year, and operating profit rose 39.6% to KRW 9.8 billion. These results exceeded market expectations, hitting an all-time high for quarterly sales. Notably, despite the advertising and promotional expenses ratio climbing from 9.5% in Q2 last year to 13.1% this quarter, the operating margin improved by 0.5 percentage point to stand at 22.5%. Among product lines, the increase in skincare sales played a major role, and other products including skin boosters also grew 44.9%. Analyst Oh commented, "Active marketing investments have been directly linked to sales growth, successfully absorbing the burden of increased costs."

Olive Young and exports were key drivers of high growth from a channel perspective. Neopharm's second quarter online sales grew 43.1% year-on-year to KRW 12.3 billion, while offline sales rose 28.5% to KRW 22.6 billion. Exports grew by 50.0% to reach KRW 8.7 billion. In particular, exports to the United States soared 65.1% year-on-year, and to other regions by 89.0%, indicating further diversification of export destinations.

By brand, Zeroid achieved high growth in the upper 40% range, while Olive Young sales are estimated to have increased by 140%. For Real Barrier, both the Olive Young and online channels grew together, and Daiso sales increased dramatically by 160% due to SKU expansion and orders from all locations.

Analyst Oh expects Neopharm to continue delivering solid results for the remainder of the year. She said, "Although the timing of Amazon Prime Day, which moved from Q3 last year to Q2 this year, will have some base effect in the third quarter, the follow-up marketing for Prime Day continued through early July and overall momentum for exports remains robust, so the possibility of a significant drop in sales appears low." She added, "Major brands plan to expand character collaborations and marketing in the second half, and a U.S. customs duty refund is scheduled for the third quarter, so achieving the annual guidance should not pose any significant difficulty."

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