Only the Retail Investors Who Panic-Sold Will Regret It? ... "520,000-Won Price Target: Now Is the Time to Buy Cosmetics" [Weekend Money]

Korea Investment & Securities: "Exports and Amazon rankings remain strong"
Kolmar Korea and APR in focus... "Stock price correction presents a buying opportunity"

Although the strong won has triggered a stock-price correction in the cosmetics sector, a securities firm says consumer demand remains solid, making this a buying opportunity.

Korea Investment & Securities said of the cosmetics sector, "As the market enters the third-quarter earnings season, concerns about exchange rates are likely to affect the overall market. Companies in the sector are therefore better positioned if they are less affected by exchange-rate movements or if related uncertainties have already been priced into their shares."

Investor sentiment toward the cosmetics sector has been negative amid the won's appreciation since July. Kim Myung-joo, an analyst at Korea Investment & Securities, said, "The stronger the sales growth companies achieve overseas, the greater the negative impact of the stronger won on them. Meanwhile, companies that have gained popularity in Europe are increasingly likely to see profitability decline in the second half of the year because of air freight costs. These are the reasons cosmetics stocks, particularly APR, have fallen sharply over the past month." APR shares fell 27.87%, from 367,000 won on September 28 to 287,000 won on October 28, based on closing prices.

Concerns have also grown that protests in France and Italy will dampen demand among European consumers. However, no meaningful change has been identified so far. Korea Investment & Securities forecast that, as South Korea and France vie for the top spot in global cosmetics exports, instability in Europe could, over the long term, help strengthen the position of South Korea's cosmetics industry in the global market.

Although cosmetics stocks have undergone a correction, export data and the Amazon rankings of major brands remain strong. From October 1 to 20, total cosmetics exports reached $660.73 million, up 45.4% from the same period a year earlier. The number of Korean cosmetics products in the top 100 of Amazon's Beauty category also rose to 56 on October 27, from 34 on June 8.

Analyst Kim said, "The factor behind the valuation derating of consumer goods companies is not temporary earnings weakness caused by global expansion or other factors, but declining popularity in the markets they have entered." Kim added, "Downward revisions to earnings estimates for the sector due to the stronger won and rising freight costs, and the resulting stock-price correction, are inevitable. But given the solid global demand for Korean cosmetics at present, it is excessive to talk about a valuation derating in the sector."

On May 28, Korean and international visitors line up to enter the 2025 Seoul International Cosmetics & Beauty Industry Expo and International Health Industry Expo in Gangnam-gu, Seoul. The photo is unrelated to the article. May 28, 2025. Photo by Kang Jinhyung.

Korea Investment & Securities named Kolmar Korea as the company least affected by exchange-rate movements. More than 80% of Kolmar Korea's total sales, excluding those of HK inno.N, come from domestic transactions, limiting the impact of the stronger won on its sales and operating profit. Analyst Kim said, "Kolmar Korea was the first company in the cosmetics sector to have expectations for its third-quarter earnings revised downward, so earnings are not a concern. If the current trend in cosmetics exports continues through the end of the year, expectations for Kolmar Korea's fourth-quarter earnings could be revised upward."

The firm also said APR, whose share price has recently fallen sharply, warrants attention. Analyst Kim said, "With sales still holding up well, concerns about a decline at Medicube are excessive. Investor sentiment toward the sector is weak because of various factors, so APR's share price may remain volatile in the short term. But its solid revenue growth is unchanged, and the share price is expected to recover."

Korea Investment & Securities set price targets of 185,000 won for Kolmar Korea and 520,000 won for APR, and rated both stocks "Buy."

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