APR 45% Below Peak... "K-Beauty Trend to Continue" [Click e-Stock]

Korea Investment & Securities Maintains 'Buy' Rating

Korea Investment & Securities said on the 11th that it was maintaining its “Buy” rating on cosmetics company APR and its target price of 450,000 won. The target price implies 76.1% upside from the closing price of 255,500 won on November 6.

“Due to weak earnings resulting from foreign exchange effects, APR’s share price is currently 45% below its 52-week high of 464,500 won,” said Kim Myeongju, a researcher at Korea Investment & Securities.

Medicube Hongdae Flagship Store. APR

One concern among investors is whether Medicube, APR’s flagship brand, can sustain its popularity. This is the third year since Medicube gained popularity overseas, and many Korean cosmetics brands have had product life cycles of two to three years.

“Many investors have doubts about whether Medicube can sustain its popularity,” Kim said. “As a result, APR’s valuation has fallen significantly from past levels, even as the company continues to achieve impressive growth in global markets.”

However, Kim said that, unlike in the past, K-beauty has established itself as a category within the global cosmetics industry. This is supported by competitive original equipment manufacturing and original design manufacturing (OEM/ODM) infrastructure, as well as high online penetration. With consumers highly interested in beauty, Korean brands are quickly launching new products that reflect the trends sought by global consumers. Kim said APR is the company leading this trend.

Rather than focusing on building brand image, APR has allocated more resources to rapid product launches, creating market-specific content, and marketing. Korea Investment & Securities estimates that APR works with about 30 contract manufacturers. Its ability to quickly launch products that match trends has also helped build Medicube’s brand image.

Other Korean brands have adopted similar strategies following Medicube’s success, but have yet to match APR’s results. “As long as K-beauty remains popular globally, APR’s first-mover advantage in the global cosmetics industry is also expected to last for a long time,” Kim said. “We view the share price correction as a buying opportunity in APR, which can defy market preconceptions and demonstrate a new product life cycle.”

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