[EQUITIES] AmorePacific to gain from Chinese tax cut

[THE INVESTOR]  AmorePacific’s revenue from China will increase dramatically following the government’s decision to reduce consumption tax, according to LIG Investment and Securities on Oct. 14.

“Following the Chinese government’s decision to cut the consumption tax by half to 15 percent, duty-free sales will decrease gradually but local turnover will surge,” said Kang Su-min, an analyst at LIG. 

The South Korean beauty giant’s operating profit in the third quarter will jump to 218.7 billion won (US$193.39 million) and sales to 1.44 trillion won, up 33.8 percent and 25.9 percent, respectively, from the same period last year, in line with the market consensus, she said.

The recent recall of its toothpastes containing a preservative with toxic chemicals, however, will not significantly affect the performance, as “it is difficult to estimate the cost and it will be reflected,” said the analyst adding that “since toothpaste products do not account for a big portion of revenue, the aftereffects will be limited.”

By Hwang You-mee (glamazon@heraldcorp.com)