APR: Time To Take Profits (Three Major Reasons)

• There are three major reasons why we would take profits on APR (278470 KS) at current levels.

• They include lofty valuations, increased competition, and share price decline post large scale dividend payout announcement.

• APR could be facing especially tough competition for the beauty device products from Amorepacific, LG H&H, and others especially starting in 4Q 2025.

Amorepacific Corp's MakeOn Skin Lite Therpy 3S Beauty Device (Source: Amorepacific Corp)

APR (278470 KS) has been one of the best performing beauty products/cosmetics related stocks in Korea. APR's market cap has surged to 6.4 trillion won, just behind Amorepacific Corporation (090430 KS) (7.7 trillion won) and now more than LG H&H (051900 KS) (5.1 trillion won). APR completed its IPO on 27 February 2024 at a market cap of 1.9 trillion won. Since then, its market cap has risen 227%.

APR has delivered strong sales and profit growth, especially for exports in the past several quarters, leading to a blistering rise in its share price (up 196% in the past one year), sharply outperforming the major beauty products/cosmetics companies in Korea as well as KOSPI in the same period.

However, there are three main reasons why we would take profits on APR at current levels.

• First, valuations have surged higher and they are no longer attractive.

• Second, increased competition for the beauty device products are likely to lead to lower sales and profit growth.

• Third, APR just announced a large scale dividend payout amount today and afterwards its share price declined by more than 2%. This is a concerning signal as it suggests some investors would rather have the company reinvest more in its business and also buy back and cancel the shares rather than payout dividends.

APR vs Other Korean Cosmetic Companies and KOSPI Share Price Comparison

APR vs Other Korean Cosmetic Companies and KOSPI Share Price Comparison (Source: Google finance)