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[Alpha Biz= Kim Sangjin] Hana Securities reported today that AK Industrial's Q4 performance is expected to meet market consensus but will continue to be affected by weak demand in China.

In a preview report for AK Industrial’s Q4 earnings, Hana Securities lowered its target price for the company from KRW 20,000 to KRW 18,000.

On a consolidated basis, Q4 revenue is projected to decrease by 3% year-on-year to KRW 170 billion, with operating profit expected to drop by 31% to KRW 8 billion.

Hana Securities explained, "Overall sales were sluggish, with declining export revenue due to continued weak demand from China, contributing to a decrease in total cosmetics sales and weakening profit resilience."

In the cosmetics segment, domestic sales growth is estimated at 15%, while exports are expected to decline by 10%.

Exports from AK Industrial’s cosmetics division are primarily distributed to China, Japan, and Vietnam, with China accounting for over 80% of the total as of last year.

Regarding the Chinese market in Q4, Hana Securities noted, "Although there was slight growth during the Singles' Day shopping festival, export revenue decreased by more than 10% due to overall weak market demand."

The household goods division is also expected to show weak performance in both domestic and export markets. However, despite the decline in revenue, profitability is anticipated to improve compared to last year due to the absence of one-time costs, such as performance bonuses, that affected Q4 2023.

 

 

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